The Office for National Statistics have released the latest GDP figures for the first quarter of 2021. With the first part of the year spent in lockdown together with navigating new trading terms with the EU, businesses have been presented with a difficult start to 2021.
The UK economy shrank by 1.5% in the first two months of the year but managed to gather momentum in March as lockdown began to ease.
As lockdown restrictions eased in March, the reopening of schools and an increase in retail spending contributed to the economy growing by 2.1% in March. This the biggest monthly growth since last August.
The economy is still 8.7% smaller than it was before the pandemic however Economist have now predicted that the UK is on course for a bounce-back this year.
Sharon Smith, CEO of Herefordshire & Worcestershire Chamber of Commerce, said: “While the decrease in the economy is a set back for the UK, the slow down compared to previous national lockdowns show that businesses are beginning to work out how to cope with the harshest of pandemic restrictions and demonstrated the resilience of our businesses.
“The March bounce back is promising, however there is still a long way to go to return to pre pandemic levels. As restrictions begin to relax and the vaccine rollout continues there is optimism that there will be a rebound during the second quarter of the year and businesses can regain lost confidence and begin to look toward the future with a little less caution.”
Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “While the UK economy contracted in the first quarter, the downbeat headline figure masks a renewed momentum through the quarter from January’s drop in output to an exceptionally strong March outturn as lockdown measures started to ease.
“The decline in economic output in the first quarter largely reflected the squeeze on activity from coronavirus restrictions, which was partly offset by growing business resilience to those restrictions and a monthly boost from the reopening of schools in March.
“The first quarter decline should be followed by a robust rebound in the second quarter as the effects of the release of pent-up demand, as restrictions ease and the strong vaccine rollout, are fully felt.
“However, with the longer-term economic damage caused by coronavirus likely to increasingly weigh on activity as government support winds down, the recovery maybe slower than many, including the Bank of England, currently predict.”