UK economy stagnated even before pandemic hit

The UK economy contracted even before the Covid-19 pandemic hit consumption, as the dominant services sector stagnated while wet weather hit output in the construction sector.

Output fell 0.1 per cent in February compared to the previous month, according to the Office for National Statistics. This is worse than a 0.1 per cent expansion expected by economists polled by Reuters.

Economists said wet weather weighed on building activity, which fell 1.7 per cent compared to the previous month.

The services sector, which accounts for about 80 per cent of output, flatlined, while manufacturing production expanded 0.5 per cent.

© Rob Kent-Smith, Head of GDP, Office for National Statistics

January’s output was revised up to 0.1 per cent, pushing the growth rate in the three months to February to 0.1 per cent.

“Today’s figures show that in the three months to February, which was before the full effects of coronavirus took hold, the economy continued to show little to no growth” said an ONS statistician.”

February’s output data are the last to refer to the pre-pandemic period.

Since mid-March, consumption has crashed following the lockdown that closed down a large part of the services sector, including restaurants, cinemas and non-essential shops, while business activity plummeted to its lowest level in twenty years according to survey-based data. 

The February figures “will be the last figure that looks anything like “normal” for a while,” Paul Dales, chief UK economist at Capital Economics, said.


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