UK GDP shows 0.0% development in three months to January
UK gross domestic product (GDP) was flat in the three months to January 2021, based on the Office of National Statistics.
The numbers, revealed ahead of Chancellor Rishi Sunak’s first budget, show services showed no growth and production (including manufacturing) fell by 1 percent.
Construction grew by 1.4 percent.
Commenting on today's GDP figures for that 3 months to January, Head of GDP Rob Kent-Smith said:
“The economy continued to exhibit no growth overall in the latest three months. Development in construction, driven by housebuilding, offset another decline in manufacturing, particularly the drinks, cars and machinery industries.
“The dominant services sector also showed no growth in the latest 3 months with falls in retail and telecoms balanced by strength in rentals, employment and education.”
Coronavirus
The ONS said last month that GDP growth slowed to some standstill within the last quarter of 2021 following a 0.5 percent rise in the time before.
As they are as much as January only, the figures don't take into consideration the major impact the the coronavirus might have on the British economy.
The first cases started in China in December but it took weeks prior to the disease started having an influence on the economy.
The impact has been so huge that the Bank of England cut rates of interest from 0.75 percent to 0.25 per cent, setting borrowing costs in their lowest reason for history.
Sensible and timely package of measures through the Bank
PwC chief economist John Hawksworth said: “The financial institution of England introduced a timely and comprehensive package of measures today including mortgage loan cut to 0.25 per cent, a new term funding scheme along with a decrease in the counter-cyclical buffer for banks to zero, which should support additional lending through the duration of maximum Covid-19 impact within the next couple of months.
“This package seems well-judged and also the support for that income of small , medium-sized businesses through additional bank lending capacity might be a minimum of as important as the headline rate of interest cut.
“It is interesting that the MPC chose to not extend QE further, probably judging that further asset purchases would not have significant benefits at the moment when long-term interest rates already are so low.
“Monetary policy are only able to achieve so much in the face of a significant supply shock like Covid-19, however, and all eyes will now be around the package of emergency fiscal policy measures that the Chancellor is expected to announce later today in his Budget speech. But it is best to see monetary and fiscal policy cooperating today to address this major economic challenge.”
