The UK economy crashed a record 5.8% in March when the coronavirus impact first began smashing into companies’ output.
The appalling GDP data is expected to get far worse as it only covers the period before the lockdown’s worst effects took hold on businesses.
Over the three months to the end of March, GDP fell 2% – the worst quarter since Autumn 2008 at the height of the banking crash – with nearly all industries contributing to the crash.
In the services side of the economy, which makes up the bulk of London’s employers, output crashed 6.2% and construction 5.9%, the Office for National Statistics said.
The productive sectors of the economy, which include manufacturing, fell 4.2 per cent, a monthly decline exceeded only during the miners’ strikes of the Seventies and the ‘winter of discontent’ in January 1979.
Manufacturing alone collapsed 4.6%.
The ONS statisticians said the falls were “signalling the first direct impacts of the coronavirus on the economy.”
March’s fall was almost as big in a single month as the 6.9 per cent drop in output over more than a year during the global financial crisis.
Restrictions on movement began on March 23, only towards the tail end of today’s keenly awaited data.
The travel restrictions had even impacted on the ONS’s own ability to collect today’s data.
Jonathan Athow, deputy national statistician for economic statistics at the ONS said: “With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall.
“Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially.”
Only small pockets of the economy managed to scrape any growth, including IT support as companies shifted to work-from-home, pharmaceuticals manufacturers and makers of soaps and cleaning products.
Athow added: “Although very few industries saw growth, there were some that did including IT support and the manufacture of pharmaceuticals, soaps and cleaning products.
“The pandemic also hit trade globally, with UK imports and exports falling over the last couple of months, including a notable drop in imports from China.”
London’s key industries of finance and insurance managed a 0.1% increase in the quarter – one of the better performers – but its huge hotels and restaurants industry collapsed nearly 10%.
A breakdown of the hospitality sector for the month of March was even worse, revealing that hotels fell 14.6%. Travel agents plunged 23.6% in the month as demand collapsed.
Education, another big element of the London economy, fell sharply too as universities and schools were closed, while motor dealerships plunged 10.7%.
The closure of car plants was cited as the main reason for the sharp fall in manufacturing in March, as factory closures across the country sent car industry output down 20.5%.
Economists said the figures reinforced the message that the UK was now in the grips of a very deep recession.
Figures for April, and then the second quarter, are expected to be far worse than those published today. There remains deep uncertainty, however, about how the government’s many measures to stave off the worst effects of the virus lockdown on job losses.
Some economists say the combination of unprecedented loans, grants and funding of furloughed staff wages has prevented a dramatic depression that could last for years. Others say it could be only delaying the inevitable.
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