United Kingdom: Economic activity drops at sharpest pace since April 2020 in January
GDP slid 2.9% in month-on-month seasonally-adjusted terms in January, which contrasted December’s 1.2% increase. The figure marked the sharpest drop since April 2020, and was driven by the imposition of a third national lockdown in the month which saw schools and non-essential businesses close. That said, the fall was notably shallower than market expectations.
On a rolling quarterly basis, GDP decreased 1.7% in November last year to January, contrasting October–December’s 1.0% expansion.
Economic activity will be downbeat in Q1 as a whole on tough restrictions. However, momentum should build from Q2 as vaccines are rolled out, restrictions are progressively scaled back and additional fiscal stimulus supports demand.
Commenting on the outlook were analysts at Berenberg:
“We expect a strong consumer-led recovery from spring onwards as savings normalise, face-to-face services re-open and manufacturers step-up production to meet rising demand. We project real GDP gains of 6.2% in 2021 and 5.7% in 2022, with output reaching its pre-pandemic level by Q2 2022”.