Gdp

Last week The Spectator highlighted new data from the OECD that offers a weekly update comparing a country’s current GDP levels to the previous year. It continues to show the UK experiencing some of the highest levels of economic damage. If you factor in lockdown stringency, you can also make out a rough correlation between countries under the strictest lockdowns and countries taking the biggest hits to GDP. Just how reliable are these calculations? A cross-check between the OECD data and the Office for National Statistics' monthly GDP update would suggest it’s pretty spot-on, if not slightly more positive. Today’s update from the ONS shows the economy to be 9.2 per cent below where it was in January 2020.

It’s been no mystery that the UK economy took a severe beating in 2020: two lockdowns, a host of circuit-breakers and fire-breakers, Christmas cancelled for millions of people. The experience of an economy forced to hibernate for months on end last year is reflected in today’s GDP update from the Office for National Statistics, showing the economy contracted 9.9 per cent last year — the ‘largest yearly fall on record’ and biggest contraction in 300 years. The fall isn’t quite as stark as the Office for Budget Responsibility forecast alongside the Chancellor’s spending review last November (an estimated 11.3 per cent), but it still represents one of the largest economic hits among the big economies.

This morning’s update from the Office for National Statistics has boosted optimism about the prospect of the UK’s economic recovery. GDP fell 2.6 per cent in November last year, reversing the trend of six consecutive months of increases since April’s significant contraction. This takes GDP back down to 8.5 per cent below last February’s levels — wiping out the recovery gains made between roughly the end of July and November. Not, on the surface, good news — but there is a case for optimism. Cast your mind back to the economic conditions in November: England’s second lockdown had just been announced and there was a host of fire-breakers and circuit-breaks throughout the UK.

Britain's economy experienced a record rebound between July and September, growing 15.5 per cent. But the vast majority of this recovery took place early on – and there are worrying signs that this slowdown has continued in the months since.  Towards the end of the summer, monthly growth figures were already starting to disappoint. Despite August being the most open month this year since the pandemic struck, with restrictions on businesses and social gatherings the most liberal they had been since mid-March, growth was only 2.2 per cent, followed by 1.1 per cent in September. This major slowdown shows that the economy can only recover so much while major Covid-19 restrictions remain in place.

Britain's economy rebounded by a record 15.5 per cent between July and September, reflecting the relaxation of lockdown measures and increased consumer activity over the summer. This is the largest quarterly growth in the UK economy the Office for National Statistics has reported since records began in 1955. Services, manufacturing, production and construction saw big uplifts across the board in Q3, but all remain below their Q4 levels in 2019, reflecting that the economy as a whole has not recovered to its pre-Covid levels: it is still 8.2 per cent smaller than it was at the start of the year.

The theory behind a V-shaped recovery relied on the assumption that the economy would open up almost as quickly as it shut down. This did not happen. The UK moved at a much slower pace than its European counterparts exiting stringent lockdown measures. And already restrictions are being implemented again. August's GDP figures were surprisingly dismal, and now all future monthly updates for economic growth will be affected by a longer list of restrictions that are bound to impact recovery. As a result, scenarios for the UK’s economic recovery are being revised to reflect this. In the last day, we’ve had two updates: one from the IFS’s Green Budget (in association with Citi), the other from Capital Economics.

August should have been a relative boom for the British economy: restrictions were the most relaxed since the Covid crisis began. Businesses in the hospitality and leisure industries were largely allowed to reopen by this point, and public transport guidance changed to allow non-essential workers to return to the office. On top of these liberalisations, schemes like Eat Out to Help Out were brought in to encourage – even subsidise – more economic activity. Yet growth figures fell flat, increasing by 2.1 per cent – roughly half of what was expected by economists. It appears economic recovery started to stagnate (down from June’s 9.1 per cent and July’s 6.4 per cent) in a month that was primed for growth.

The UK economy continues to bounce back – but it’s the coming months that could pour cold water on a V-shaped recovery. The economy grew 6.6 per cent in July, according to data from the Office for National Statistics, with the return of pubs, restaurants, hairdressers and more non-essential shops giving us another boost back towards pre-Covid levels. But there’s still a long way to go: despite a record-breaking growth rate between May and July, Britain is still nearly 12 per cent below its GDP level in February 2020, having experienced a record-breaking contraction – the biggest seen in 300 years, and the worst of any major economy during the crisis so far.

Last month, Britain joined the club of countries whose national debt is greater than 100 per cent of economic output. According to an Office for National Statistics update, public debt exceeded £2 trillion, taking the debt to GDP ratio over 100 per cent for the first time in 60 years. A fast economic recovery will prove vital for getting the Britain’s deficit under control Crossing this mark doesn’t come as much of a surprise given the copious amounts of spending the UK has done on Covid-related policy. July saw the fourth highest borrowing of any month on record – the top three coming in the previous three months when the UK was under strict national lockdown.

It’s odd to read headlines today saying that the UK has officially entered recession. We’ve known this for months: shops were closed, restaurants shuttered. You couldn’t get a cup of coffee or a haircut, offices were closed and millions furloughed. These were not normal times – but we knew that then, as we know it now. What we didn’t know was how far the economy had contracted, and how much this could be remedied by ending lockdown. The big news today, revealed by official figures released by the Office for National Statistics this morning, starts to answer this. It turns out that our economic hit was one of the hardest in Europe. UK GDP fell 20.

Sweden has released growth figures for the second quarter – a contraction of 8.6 per cent – and two narratives are circulating. The first is that the Swedish experiment has failed spectacularly, resulting in both a higher death toll than its Scandinavian counterparts as well as a collapsed economy. The second is that Sweden has been vindicated, taking a much less severe economic hit than the EU’s average and in a better position to recover as well. Which is the fairer assessment? Sweden has indeed taken an economic beating despite never instigating a full lockdown.

Putting the UK into lockdown was only going to send growth in one direction: down. While today’s figures from the Office for National Statistics were expected, they nevertheless confirm that the UK has experienced its largest monthly economic contraction on record. The UK economy shrank 20.4 per cent in April. Combined with March’s GDP drop (now the second largest fall since records began), the British economy is a quarter smaller than it was in February. Putting these figures alongside other monthly slumps makes for stark comparison. Hits taken for additional bank holidays and for the pain experienced during the financial crash barely compare to what’s happened in light of the shutdown of Britain’s economy.

The global lockdown has seen economies shrink and unemployment soar across the world, pushing governments to borrow at rates never seen in peacetime. On Wednesday, the OECD published country-by-country estimates for the economic hit – and its projections for the UK are some of the worst. Under the scenario of no second wave (that is, assuming countries won’t need to lockdown again this year), Britain’s economic downturn is forecast to be the worst in the G7, and fourth-worst in the OECD, with an 11 per cent fall in annual GDP. In the case of a second wave, prospects still aren’t great: in the G7, Britain’s 14 per cent downturn is on par with Italy and France, and the country retains a dismal place in the OECD line-up.