UK economy shrinks by 2% in first quarter, March witnesses record fall

The British economy contracted by 2 per cent in the first three months of the year 2020, from January to March, signalling the first direct impact of COVID-19. The Office for National Statistics (ONS) said in its monthly GDP estimate that the rolling three-month growth fell by 2.0 per cent, registering the lowest rate since the three months to December 2008 during the Great Recession.

According to the report, all the headline sectors provided a negative contribution to GDP growth in the three months to March 2020. While the services sector fell by 1.9 per cent, production and construction by 2.1 per cent and 2.6 per cent respectively. Among the services sector, accommodation and travel agents are hardest with 14.6 per cent and 23.6 per cent decline in the respective industry.

March 2020 witnessed the biggest monthly fall in GDP since the series began in 1997, falling down by 5.8 per cent. However, the Statistics Office has cautioned that the estimates are subject to more uncertainty than usual due to the challenges faced during data collection under the government's imposed public health restrictions.

“The pandemic also hit trade globally, with UK imports and exports falling over the last couple of months, including a notable drop in imports from China,” said Jonathan Athow, Deputy National Statistician for Economic Statistics, in a statement.

Read: UK Finance Minister Rishi Sunak Extends Furlough Scheme Until October

Furlough scheme extended

Meanwhile, British chancellor Rishi Sunak has extended the job retention scheme by a further four months until the end of October to boost millions of jobs and businesses. The India-origin Finance Minister said in a statement on May 12 that the government, by that time, will have provided eight months of support to British people and businesses.

“This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects,” said the Finance Minister while announcing the extension of furlough scheme from the House of Commons.

Read: Rishi Sunak Drawing Up Blueprint To Ease UK's COVID-19 Lockdown: Report

Read: Britain To Quarantine Travellers For 14 Days To Prevent Second Wave Of Coronavirus

(Image credit: AP)