UK Economy Shrank by Record 11%

World | August 23, 2022, Tuesday // 09:43
Bulgaria: UK Economy Shrank by Record 11% @astraherald.com

In 2020, as Britain faced the brunt of the COVID-19 pandemic, it saw its biggest fall in output for more than 300 years, and a bigger fall than any other major economy showed updated official figures.

Gross domestic product fell by 11.0% in 2020, the Office for National Statistics reported. This is a bigger fall than any of the previous ONS estimates and the biggest fall since 1709, according to historical data kept by the Bank of England.

UK statisticians regularly update GDP estimates as more data becomes available.

Initial estimates from the ONS already indicated that in 2020 Britain suffered the biggest drop in output since the Great Frost in 1709. But more recently the ONS revised the scale of the fall to 9.3%, the biggest fall since just after the First World War.

Even before the latest revisions, Britain's economic decline was the biggest in the Group of Seven, and the latest downward revision made it bigger than Spain's, which saw output fall by 10.8%.

However, the ONS warned against drawing direct comparisons with other countries, as most of them - with the exception of the US - have not yet carried out the same kind of in-depth audits as Britain.

The downward revision to GDP reflects smaller contributions from healthcare and retail than previously thought.

"Health spending was higher than our original estimates, meaning that its overall contribution to the economy is smaller," ONS statistician Craig McLaren said.

The ONS had already reported a drop in routine care provided by Britain's National Health Service as it focused on treating COVID-19 patients and limiting the spread of the disease in hospitals.

A closer look at the increased costs faced by individual retailers also led to a downward revision of the sector's contribution, while factory output was revised upwards to account for lower input costs.

The British economy recovered sharply last year and in November 2021 it returned to its pre-pandemic size. But fast-rising inflation means the Bank of England expects the economy to slip back into recession later this year.

The ONS will publish updated growth figures for 2021 and the first half of 2022 on 30 September.

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