UK economy ended 2020 better than previously expected

08 Apr '21

2 min read

Pic: Shutterstock

The pandemic-hit UK economy grew quicker than earlier expected in the final three months of 2020, but still shrank by the most in more than three centuries that year, according to official data, which revealed the biggest pile of household savings on record last year. The Bank of England thinks this will fuel a recovery when consumers are freed from lockdown.

Gross domestic product (GDP) increased by 1.3 per cent between October and December from the previous three-month period, UK media reported citing the Office for National Statistics (ONS).
In 2020, GDP fell by 9.8 per cent from 2019, only slightly less sharp than an initial estimate of a 9.9 per cent slump.

The UK economy suffered the biggest drop of all countries in the Organisation for Economic Cooperation and Development (OECD) except for Argentina and Spain last year, OECD data has shown.

It remained 7.3 per cent smaller than before the pandemic, in inflation-adjusted terms, the second biggest drop among eight major economies listed by the ONS.

Although this partly reflects the way different countries produce the data, some of the weakness shown by Britain’s economy, particularly in household spending, was real.

After a rollercoaster 2020, when GDP careened 19.5 per cent lower in the second quarter, during the first lockdown, and grew by almost 17 per cent in the third, the Bank of England expects growth of 5 per cent in 2021 as a whole, helped by Europe’s fastest vaccination programme.

The savings ratio rose to 16.1 per cent from 14.3 per cent in the third quarter and for 2020 as a whole it hit a record high of 16.3 per cent, compared with 6.8 per cent in 2019, the ONS said.

Fibre2Fashion News Desk (DS)

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