The UK economy plunged 9.9% in 2020, the largest annual contraction in output in over 300 years.
Despite the poor result of the year, the 1% increase in GDP (gross domestic product) observed in the last quarter avoided a recession, in addition to indicating a recovery for 2021.
The result between October and December was at the top of economists’ forecast range in Reuters news agency research.
So it is likely that the UK will escape two quarters of contraction – the standard definition of a recession in Europe – even if the economy contracted in early 2021 due to the effects of a third lockdown.
“When the restrictions are relaxed, we continue to expect a strong recovery in the economy,” said Dean Turner, economist at UBS Global Wealth Management.
The UK economy grew 1.2% in December alone, after falling 2.3% in November, during a partial lockdown, leaving output 6.3% below February level, before the start pandemic, said the national statistics agency.
However, the UK central bank predicts the economy will shrink by 4% in the first three months of 2021 due to a new lockdown and Brexit.
“Today’s data shows that the economy has suffered a severe shock due to the pandemic, which has been felt by countries around the world,” said Finance Minister Rishi Sunak.
The production contraction last year was the largest since official modern records began after World War II. Longer-term historical data from the Bank of England suggests this is the biggest drop since 1709.