April 2020 – the first full month of the coronavirus lockdown – experienced a sharper fall than the 5.8 per cent drop in March as the effect of social distancing and lockdown rippled through the economy.
The Office for National Statistics (ONS) revealed GDP fell 20.4 per cent in the month, the largest fall since the monthly records began in 1997, reflecting widespread falls in services, production and construction output.
This is the equivalent to £30bn taken out of the economy.
The figure is three times greater than the fall experienced during the 2008 to 2009 economic downturn. During the global financial crisis, from the peak in February 2008 to the lowest point of March 2009, a total of 13 months, GDP contracted 6.9 per cent.
Breaking the figures down into industries, the ONS said some were less affected by Covid-19 than others, with the services sector experiencing a 19 per cent fall, air travel contracting 93 per cent, arts and entertainment declining 51 per cent and the accommodation sector falling 87 per cent.
The latest industrial and manufacturing production data also shows a downward trajectory, dropping 20.3 per cent and 24.3 per cent respectively.
‘Quarter of the economy vanished overnight’
Chris Bailey, European strategist at wealth management firm, Raymond James, said it was an historically bad day for UK economic data, and one that would still be talked about in one hundred years.
“This 20.4 per cent GDP fall in April follows the 5.8 per cent drop in March, meaning that a quarter of the UK’s economic output simply vanished overnight as the country went into lockdown.
“To put that in perspective, that’s the entire contraction of economic activity seen during the 2008/9 recession, multiplied by three, condensed into a matter of weeks.
“While the numbers are certainly headline-grabbing, we can be fairly confident that the worst is now behind us, so long as the country’s reopening does not lead to another spike in Covid-19 cases to rival the first.”
Bailey added that today’s grim figures highlight the biggest challenge facing policymakers: encouraging all participants in the economy to return to their pre-pandemic activities, while significant uncertainty lingered.
“A bit of optimism can go a long way, and rebuilding the animal spirits of consumers, businesses and entrepreneurs remains critical,” he continued.
“The UK is not alone in facing such challenges but the internationally open nature of the economy, ongoing Brexit discussions, and some stubborn Covid-19 data make the UK’s clawback of past performance a little more exacting.”