'Worst economic crisis associated with a major economy' as UK economy shrinks at fastest rate for 300 years
The Office for National Statistics said gdp (GDP) fell by 9.9% in 2021 as no sector of the economy was left unscathed by lockdowns and plummeting demand during the pandemic. It had been the largest fall in annual GDP since the Great Frost of 1709, once the economy shrank by 13%.
However, after registering single.2% growth in December, despite strong restrictions across large parts of the country, the economy looks set to prevent what could have been its first double-dip recession since the 1970s.
A double-dip means two recessions within a short time, while a recession is defined as two consecutive quarters where the economy contracts.
Little to cheer
Suren Thiru, the head of economics in the British Chambers of Commerce, said: “Despite avoiding a double-dip recession, with output still well below pre-pandemic levels amid confirmation that 2021 would be a historically bleak year for the UK economy, there is little change to cheer within the latest data.”
All four sectors tracked by the ONS saw a stop by output, the statisticians said, with the highest drop arriving the construction sector, which contracted by 12.5%.
ONS deputy national statistician for economic statistics Jonathan Athow said: “Loosening of restrictions in many areas of the UK saw elements of the economy recover some lost ground in December, with hospitality, car sales and hairdressers all seeing growth. An increase in Covid-19 testing and tracing also boosted output.
“The economy continued to grow in the fourth quarter in general, despite the additional restrictions in November.”
The economy was helped in December by an easing of lockdown restrictions that had been in place in parts of the country in November. It had been also aided by increased buying within the run-up to Christmas, and stockpiling in front of the end from the Brexit transition period
The health sector grew by 2.4% after being involved with running coronavirus testing and tracing schemes across the UK.
Worst economic performance
Chancellor Rishi Sunak said the figures revealed the “serious shock” the pandemic has had on the economy.
He added: “At the Budget I'll set out the following stage in our plan for jobs, and the support we'll provide with the next phase of pandemic.”
Shadow chancellor Anneliese Dodds said: “These figures make sure not only has got the UK had the worst death toll in Europe, we're experiencing the worst financial crisis of any major economy.
“Businesses can't wait any longer. The Chancellor needs to come forward with a plan to secure the economy in the months ahead, with support going hand-in-hand with health restrictions.”
She required a “smarter furlough scheme” as the current product is set to operate in April, plus an extension towards the business rates holiday and also the VAT reduction for hospitality and tourism companies.
The 9.9% fall marks the worst year for the UK economy since records began.
Second World War
GDP was initially measured as a direct consequence from the Second World War, and the measure has never previously dropped by more than 4.1%.
That last big drop was in 2009, but the Bank of England has also estimated historic GDP going bank centuries.
James Smith, research director in the Resolution Foundation, said: “The ability to sustainably lift lockdown restrictions with no virus caseload increasing determines whenever a true recovery can begin, however the strength of that recovery will also be shaped by decisions taken in the upcoming Budget.
“That should include an extension, and gradual phasing out, of the furlough scheme, along with additional grants directed at sectors most affected by continuing restrictions.”
Headline was originally 100 years but has been revised to 300
