Following six consecutive months of growth GDP fell 2.6% in November as varying restrictions were brought into place across the UK. This economy is now 8.5% smaller than it was in February, proving a roadblock in the “V” shaped recover of the economy. The data does not include the figures from December where tougher tiered restrictions were introduced across England and further contraction is expected.
Add this to the double header of the end of the Brexit transition period and businesses are faced with a tough start to 2021. There is positive news however, the fall was less than that of the first lockdown in April, showing businesses adaptability to conditions. Also some construction and manufacturing activity improved.
Chancellor Rishi Sunak, said: “it’s clear things will get harder before they get better and today’s figures highlight the scale of the challenge we face.
However, he said the vaccine roll-out and economic support measures meant there were reasons to be hopeful. “With this support, and the resilience and enterprise of the British people, we will get through this.”
Arjun Heir, Herefordshire & Worcestershire Chamber of Commerce, Policy Executive, said: “The latest figures released by the ONS shows real gross domestic product (GDP) fell by 2.6% in November 2020. This shows the impact of a national lockdown has on an economy which has been significantly hit hard by the Covid-19 pandemic. As we see the vaccination program grow and more and more people have the jab, we hope to see restrictions being eased and the economy kickstart its recovery phrase.”
BCC Head of Economics Suren Thiru said: “The latest figures highlight the continued damage being done to the UK economy by coronavirus.
“The decline in output in November was largely driven by the drag on activity from the second lockdown, with consumer-focused services firms, who are most exposed to lockdown restrictions, enduring a particularly difficult month.
“With any post-lockdown rally in output in December constrained by the tougher tiered restrictions, including the introduction of tier 4 measures, the UK economy is likely to have contracted in the final quarter of 2020.
“A third lockdown means that a double-dip recession in the first quarter of this year may be inevitable, particularly if the current post-Brexit disruption persists through the quarter.
“A clear and comprehensive plan is urgently needed to support the economy throughout this year. This should include closing the current gaps in government support and providing more significant grant funding to support cash strapped businesses. A fit-for-purpose Test, Trace and Isolate system remains critical to keeping the economy moving once the current lockdown ends.”
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