The U.K. has one of the largest economies in Europe as well as around the world. However, even for the U.K., the coronavirus pandemic created a lot of challenges. It won’t be easy to solve all problems in 2021, as it would take time to return to pre-coronavirus results. Unfortunately, the country’s economy contracted by 9.9% in 2020, its largest contraction on record. It makes sense as the pandemic affected economic activity.
Based on the information provided by the Office for National Statistics, in the final quarter of the year, gross domestic product (GDP) grew by 1%, as the country re-introduced nationwide measures in a bid to contain the spread of Covid-19 cases. Unfortunately, the pandemic is not over yet, and it would take time to stabilize the situation.
People should keep in mind that, the 9.9% annual contraction is more than twice that seen in 2009 in the aftermath of the global financial crisis. This fact once more highlights the scale of the problem.
As a reminder, economists expected the economy to decline by 8% in 2020, with a fourth-quarter expansion of 0.5%. Interestingly, this follows a revised 16.1% rebound in the third quarter as social, travel, and business restrictions were eased.
Economy and coronavirus pandemic
It is worth mentioning that, the coronavirus pandemic remains one of the major issues since 2020. Unfortunately, as of Friday morning, the U.K. recorded more than 4 million cases. Moreover, new and more transmissible variants of the virus created additional challenges.
It was a tough year for the country, due to the public health crisis, economic shutdowns as well as uncertainty regarding Brexit.
Importantly, England remains in a nationwide lockdown with no clear end date. Hopefully, approximately 13 million people received the first dose of a Covid vaccine.
Interestingly, monthly GDP in December increased by 1.2% from the previous month but remained 6.3% below the level of February 2020. As a reminder, fourth-quarter GDP remained 6.6% below the level seen in the fourth quarter of 2019.
As can be seen from the information stated above, the country’s economy suffered losses in 2020. Nevertheless, the U.K. has the potential to improve the situation. The government should join forces with companies to get the economy back on track as soon as possible. However, in the case of certain industries, it would take time to cope with challenges. For example, the pandemic decimated the hospitality industry and it is all but impossible to return to pre-coronavirus results in a short period of time.