Britain’s economy experienced its biggest annual decline in 300 years in 2020 amid the fallout from the coronavirus pandemic but will avoid a double-dip recession, according to official figures.
The Office for National Statistics said gross domestic product (GDP) fell by 9.9% in 2020, as no sector of the economy was left unscathed by lockdowns and plummeting demand during the pandemic. It was the biggest fall in annual GDP since the Great Frost of 1709, when the economy shrank by 13%.
However, the latest figures showed the economy narrowly avoided a double-dip recession, with growth of 1% in the final quarter of the year, surpassing expectations earlier in the autumn for a renewed fall in GDP as the pandemic worsened. Looser Covid restrictions in the run-up to Christmas enabled the economy to grow at a monthly rate of 1.2% in December, after a 2.3% fall in November during the second English lockdown.
Far surpassing the damage caused by the 2008 financial crisis, the annual drop in output caused by the Covid-19 emergency narrowly exceeded a 9.7% decline in 1921, when Britain was recovering from the first world war and the Spanish flu pandemic.
Pubs, bars and restaurants were able to recover some lost ground, and retail sales improved in December after the November lockdown ended and before tougher measures were imposed. Growth was also fuelled by a rise in healthcare activity, mainly because of coronavirus test-and-trace schemes across the UK.
Analysts said companies adapting to restrictions by shifting their working patterns and altering their business models – including a boom in online shopping, and pubs and restaurants operating takeaways – helped to keep the economy growing late in 2020 despite increasingly tough public health restrictions.
Output in the accommodation and food services sector – which includes hotels and restaurants – fell by a third in the fourth quarter overall but fared better than in the first lockdown, when the country came to a near standstill.