UK economy in record 20% fall for April
The size of the UK economy (GDP) fell by a record 20% in April 2020.
What is GDP?
GDP stands for Gross Domestic Product. GDP is simply the name used for the size of the economy. Our economy in the UK is measured in similar ways to most economies around the globe. If GDP falls, it means the size of the economy has shrunk.
What has happened to GDP?
The ONS* measure the size of our economy every month. They then publish the results of their findings.
In April, the ONS discovered the economy had shrunk by 20%. Which means that in the space of a month, one fifth of the economy had stopped working.
Put another way, all economic growth since 2002 was lost in a single month, as shown in this graph from the ONS;
For individual sectors;
- Construction fell by 40%
- Manufacturing fell by 24%
- Production fell by 20%
- Services fell by 19% (legal, financial, IT).
- Agriculture fell by 5%
Why has this happened?
The measures taken to control the effect of the Covid 19 pandemic have had a serious impact on business and jobs. According to Jonathan Athow of the ONS:
“April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-covid-19 fall. In April the economy was around 25% smaller than in February.
Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall.
Manufacturing and construction also saw significant falls, with manufacture of cars and housebuilding particularly badly affected.
The UK’s trade with the rest of the world was also badly affected by the pandemic, with large falls in both the import and export of cars, fuels, works of art and clothing.”
How are other countries performing?
Although official figures for April are not out yet for many countries, based on the data that is available, it seems the picture is likely to be pretty similar everywhere else one the data is available.
For example, Industrial Production in the EU was down by 17% in April; and Construction fell by 12% in March.
Sources & Notes
The ONS are the Office National Statistics, the official UK source for economic data.