This was the sharpest contraction since the fourth quarter of 2008 and followed a flat performance in the fourth quarter of 2019.
All three major drivers of growth – services, manufacturing and construction – went into reverse. More information can be found in the output, expenditure and income sections of this bulletin. The UK economy could now see growth decline by 5% in the first quarter of 2020, and if a lockdown continues, by around 15% to 25% in the second quarter (figure1.).
A prolonged recession and weak recovery could also discourage business investment and expansion, further limiting the resurgence of jobs as well as the growth of capital stock and the pace of technological advancement. The SMMT figures show that UK car manufacturing fell by 37.6% in March 2020 compared with the same month in the previous year, with an overall fall of 13.8% in car manufacturing in Quarter 1 2020 compared with the same quarter in 2019. Posted on May 14, 2020 by Aimie Stone. We assume that the Government’s measures aimed at supporting businesses and saving jobs will have a significant positive impact. On the output side of the economy, there was a widespread marked contraction in the first quarter.
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. On the output side of the economy, all sectors saw a substantial quarter-on-quarter contraction: services (1.9%), industrial production (2.1%) with manufacturing output declining (1.7%) and construction (2.6%). Analyst % Change (QoQ) Last Revised. All Rights Reserved. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. The equivalent growth rate for the UK as a whole during the first quarter was -2.0%. Jerome Powell also says the Fed isn’t considering cutting interest rates below zero. It’s down a similar amount against the euro, to €1.127. pic.twitter.com/g762UgbV3j. In Statista. This release captures the first direct effects of the coronavirus (COVID-19) pandemic, and the government measures taken to reduce transmission of the virus. This was the sharpest contraction since the fourth quarter of 2008 and followed a flat performance in the fourth quarter of 2019. Specifically, GDP contracted a record 5.8% month-on-month in March causing it to be down 5.7% year-on-year. The fall was a combined result of a decline in tax revenue and an increase in subsidies granted, primarily related to the CJRS. Indeed, EY ITEM Club predicts that the economy is unlikely to return to its size of the fourth quarter of 2019 until the first quarter of 2023. The March IHS Markit UK Manufacturing PMI (PDF, 164KB) reported that UK manufacturing output fell to the greatest extent since mid-2012, reflecting "disruption resulting from the coronavirus outbreak, lower market confidence and company shutdowns". It cited the impact of the coronavirus pandemic as the main reason for lower activity, with falls in output across the three broad categories of housing, commercial and civil engineering. Today's estimates show that the UK posted a trade deficit of 0.9% of nominal GDP in the first quarter of 2020 (Figure 9). Business investment was somewhat surprisingly flat, despite the impact of COVID-19 on economic activity and uncertainties mounting. Chart shows forms returned as a percentage of forms despatched. According to official retail sales figures, the volume of retail sales fell by 1.6% in the first quarter, with significant declines in non-food stores. According to CNBC he told the Peterson event that: “I know there are fans of the policy, but for now it’s not something that we’re considering, “We think we have a good toolkit and that’s the one that we will be using.”, POWELL on negative rates: "This is not something we’re looking at.". In conclusion, Powell also warns that while the Fed can lend money to help companies keep afloat, only politicians can agree fiscal measures to help the economy: Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. Meanwhile, many people lost their jobs in March, despite the supportive Government measures and many incomes were hit.
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