There was a sharp fall in consumer spending at the end of March, the ONS saidThe UK economy shrank more than first thought between January and March, contracting 2.2% in the joint largest fall since 1979, official figures show.
The Office for National Statistics (ONS) revised down its previous estimate of a 2% contraction, with all the main economic sectors dropping. There was a significant economic impact in March, as the coronavirus pandemic began to have an effect. The data comes as the prime minister is set for a major speech on the economy.
Jonathan Athow, deputy national statistician at the ONS, said: “Our more detailed picture of the economy in the first quarter showed GDP shrank a little more than first estimated. “Information from government showed health activities declined more than we previously showed. All main sectors of the economy shrank significantly in March as the effects of the pandemic hit.”
The first-quarter contraction is now the joint biggest drop since the July-to-September period in 1979. Mr Athow said: “The sharp fall in consumer spending at the end of March led to a notable increase in households’ savings.” The new data showed that GDP contracted by 6.9% in March.
The first-quarter figures show that the services sector – which accounts for about three-quarters of UK GDP – shrank by a record 2.3%. The ONS said production output fell by a revised 1.5% in the three months, driven by declines in manufacturing as factories temporarily shut down, while there was a fall in construction output of 1.7%.
The coronavirus lockdown only came into force on 23 March, so figures for the second quarter of the year will show the full hit on the economy. Recent ONS monthly figures showed the economy plummeted by 20.4% in April – the largest drop in a single month since records began.
That contraction was three times greater than the decline seen during the whole of the 2008 to 2009 economic downturn.
Source: bbc.com
