The UK’s economy suffered a record contraction last year, shrinking by 9.9%. Official figures show the nation suffered its biggest economic drop on record as the impact of Covid-19 took its toll on output.
Given that much of the year was spent in various forms of lockdown and with stringent restrictions in place, many were expecting bleak figures. The Office for National Statistics (ONS) highlighted that not only were these the worst figures on record but that the drop was twice that of the previous biggest drop recorded.
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Avoiding a double-dip recession
Many officials were also worried about a double-dip recession adding to the economic woes of the country. However, some now believe that this can be avoided due to economic growth in December, when restrictions were loosened slightly before the next lockdown came into force at the start of the New Year.
In November, the economy shrank by 2.3% with the nation plunged into a blanket lockdown for the entire month. However, when restrictions were eased across many areas in early December, more people started to go out and spend as businesses reopened. This resulted in economic growth of 1.2%. As a result of the December growth, the UK could avoid experiencing a first double-dip recession in decades.
A bleak year for the UK
The figures released by the ONS made for bleak reading, and many experts are concerned about getting the UK’s economy back on track.
Suren Thiru, an economic expert from the British Chambers of Commerce, said: "Despite avoiding a double-dip recession, with output still well below pre-pandemic levels amid confirmation that 2020 was a historically bleak year for the UK economy, there is little to cheer in the latest data."
The shadow chancellor, Anneliese Dodds, said the figures showed that not only was the UK experiencing the worst death toll in Europe resulting from Covid-19 but also the worst damage in terms of the economy.
Pinning hopes on the success of the vaccine
Government officials, as well as the Bank of England, are now pinning their hopes on the success of the Covid-19 vaccination programme in the hope of easing restriction and reviving the economy. The vast majority of over 80s have now had their vaccines, and the NHS is working its way through other older age groups and vulnerable people.
It is hoped that everyone will be vaccinated with their first doses by the summer, but there are no guarantees. Problems such as vaccine supplies and the ever-increasing number of mutated strains that are appearing could all impact the success of the vaccination rollout. This means that restrictions could take more time to be eased, which will further impact spending, business, and the economy.