Posted by Richard Willet Posted on 13 May 2020

UK economy shrank by a record 5.8% in March. Much more pain is to come

London (CNN Business)The UK economy shrank by a record 5.8% in March as the coronavirus caused huge swaths of the economy to seize up and the government imposed measures to contain the pandemic.

The contraction is the worst since monthly record keeping began in 1997, according to the UK Office for National Statistics. GDP for the first three months of the year fell 2% compared to the previous quarter, the sharpest decline since the global financial crisis. “With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall,” said Jonathan Athow, an economic statistician at the Office for National Statistics. “Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially,” he added.

The recession likely gathered significant pace in April and May. UK shops, pubs, restaurants, theaters, cinemas and gyms were only closed in the final week of March, when the government tightened lockdown measures in an effort to contain the pandemic.

“March’s GDP figures showed that the UK economy was already in freefall within two weeks of the lockdown going into effect. And with the restrictions in place until mid-May and then only lifted very slightly, April will be far worse,” said Ruth Gregory, senior UK economist at Capital Economics. Few industries are being spared. IT support and the manufacture of pharmaceuticals, soaps and cleaning products were among the only areas of growth during the first quarter.

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