Business UK

UK’s economy in worst contraction in 100 years

The UK’s economy shrunk at its fastest rate since the 1920s last year, as the pandemic forced thousands of businesses to remain closed for several months.

The Office for National Statistics revealed that gross domestic product (GDP) dropped by 9.9%.

However, after registering a 1.2% growth in December, despite strong restrictions across large parts of the country, the economy looks set to avoid what could have been its first double-dip recession since the 1970s.

A double-dip means two recessions within a short period of time, while a recession is defined as two consecutive quarters where the economy contracts.

“Loosening of restrictions in many parts 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,” ONS deputy national statistician for economic statistics Jonathan Athow said.

“The economy continued to grow in the fourth quarter as a whole, despite the additional restrictions in November.

“However, GDP for the year fell by nearly 10%, more than twice as much as the previous largest annual fall on record.”

The 9.9% fall marks the worst year for the UK economy since records began.

GDP was first measured in the aftermath of 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.

These measures come with caveats, but if correct, 2020 would be the worst year since 1921.

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