The locked down and coronavirus crippled United Kingdom economy stands on the brink of an economic recession after growth sank by an unprecedented 5.8% in March month-on-month.
It was the largest monthly plunge in GDP since 1997, according to the Office for National Statistics (ONS). The March regression contracted the economy by 2% for the first three months of the year, quarter-on-quarter, according to the ONS. A contraction in Q2, which might be as high as 25%, will plunge the UK into recession.
Chancellor Rishi Sunak said he wasn't surprised the UK economy shrank 2% in the first quarter. He expectedly blamed the economic damage on COVID-19, adding his newly-extended jobs retention scheme should help Britain get through the crisis.
"In common with pretty much every other economy around the world we're facing severe impact from the coronavirus, he said. "You're seeing that in the numbers."
He said this is why the government of prime minister Boris Johnson has taken the unprecedented action it must support people's jobs, their incomes and livelihoods at this time. The government also has to support businesses, so the country can get through this period of severe disruption "and emerge stronger on the other side."
Britain's economy grew by 0.1% in January due to the post-election "Boris Bounce," but contracted by 0.2% in February as the lockdowns and social distancing measures began to slow the economy almost to a standstill.
The full-year outlook for the economy is even worse because of the immense battering inflicted by COVID-19. The Bank of England (BOE) last week predicted Britain's GDP to fall by 14% in 2020, driven by a 25% plunge in the second quarter.
If this prediction comes to pass, it will be the largest annual downturn since 1706, according to BOE data. The silver lining in this gloom, however, is this unprecedented fall in the GDP will be temporary and will be followed by a rapid recovery, estimates the BOE.
James Smith, research director at the Resolution Foundation, predicts the worse for the wounded economy is around the corner. He noted the lockdown was only in place for seven working days in the first three months of the year.
"But it was still enough to bring about the biggest quarterly economic contraction since the peak of the financial crisis and the weakest single-month change on record," he said.
Smith predicts the grim economic milestones in the March data will be shattered by the April figures.
