Economy Contracting at Rapid Pace
Main Points
- The ONS preliminary estimates suggest that growth declined by 2.0 per cent in the first quarter of 2020, broadly consistent with what we suggested it could be last month (figure1.)
- The substantive contraction in growth reflects negative contributions across all the headline sectors.
- Output declined by 5.8 per cent in March itself, mainly due to record falls in construction and services.
- The latest ONS estimates are preliminary and largely uncertain but continues to suggest GDP is around 25 per cent smaller when the lockdown is in place.
- In light of the preliminary release, we forecast growth in the second quarter to decline sharply by about 25 to 30 per cent.
“In a period of radical uncertainty, the short-term economic impact of Covid-19 is becoming clearer with the publication of GDP data for March, where output is expected to be lower by about 25 per cent in months when the lockdown is in place. Restarting the economy by promoting activities in upstream sectors such as construction, some manufacturing and the government will increase overall activities via helpful spillovers. But without a vaccine, there is significant risk of a second wave which could trigger a further setback in the economy.”
Dr Kemar Whyte
Senior Economist - Macroeconomic Modelling and Forecasting
Please find the full commentary in the attachment
Related Blog Posts
What is the Current State of the UK Economy?
Paula Bejarano Carbo
Stephen Millard
26 Feb 2024
7 min read
CPI Inflation Rose in December 2023, But is Likely to Fall Below 3 per cent by May
Huw Dixon
17 Jan 2024
7 min read
Related Projects
Related News
Why it’s not worth worrying that the UK has technically entered a recession
26 Feb 2024
4 min read
1.2 million UK Households Insolvent This Year as a Direct Result of Higher Mortgage Repayments
22 Jun 2023
2 min read
The Key Steps to Ensuring Normal Service is Quickly Resumed in the Economy
13 Feb 2023
4 min read
Related Publications
UK Economy on the Road to Recovery in 2024 Following the Mild Recession
13 Mar 2024
GDP Trackers