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ONS: UK economy shrank by 19 per cent during in first three months of lockdown

Ryan McAleer and Holly Williams, PA

UK gross domestic product (GDP) fell by 19.1 per cent in the three months to May, before increasing by 1.8 per cent in the month of May, according to official data.

The Office for National Statistics (ONS) said the small growth came from the manufacturing and housebuilding sectors after restrictions began to be lifted in May.

But even with the easing of coronavirus lockdown, the UK economy remained a quarter below its pre-pandemic levels.

The GDP growth during May is also far short of the 5 per cent rise expected by most economists.

The growth in Northern Ireland, if any, is also likely to fall below the UK average.

Analysis by Stormont’s Department for the Economy recently highlighted how Northern Ireland continues to lag behind the rest of the UK, suffering a 21.5 per cent contraction in April, worse than the 20.4 per cent UK average.

The north’s biggest lender, Danske Bank, now expects the economy here to shrink by 11 per cent this year.

The latest analysis from ONS said that despite the month-on-month increase in GDP, output is still a long way from recovering from the record falls seen in March and April when the UK was in full lockdown - and was 24.5 per cent lower compared with February before the crisis struck.

Jonathan Athow, deputy national statistician at the Office for National Statistics (ONS), said of the May economy figures: "Manufacturing and house-building showed signs of recovery as some businesses saw staff return to work.

"Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck.

"In the important services sector we saw some pick-up in retail, which saw record online sales.

"However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines."

GDP: Monthly index, January 1997 to May 2020. Source: ONS

The ONS said GDP plunged 19.1 per cent in the three months to May.

May's meagre bounce back comes after GDP contracted at a record-breaking pace in March and April when the economy was brought to a virtual standstill, falling by a downwardly revised 6.9 per cent and 20.3 per cent respectively.

The data showed the all-important services sector grew by 0.9 per cent in May, while manufacturing rose 8.4 per cent and construction by 8.2 per cent as factories and building sites started to get back on stream.

But the three-month figures reveal the toll taken over the height of the lockdown, with output in the services sector - which accounts for three quarters of UK GDP - still 24.4 per cent below February levels seen before the pandemic, with much of the retail sector still mothballed in May.

Non-essential shops were only allowed to reopen in mid-June across England, while pubs and restaurants remained shut until early July.

The figures also showed manufacturing activity in May was 22.3 per cent lower than in February and construction a mammoth 38.8 per cent behind.

Experts believe June and July's GDP data should show a bigger bounce back.

But Samuel Tombs at Pantheon Macroeconomics cautioned: "More recent data suggest that the reopening of the consumer services sector in July has got off to a sluggish start, with customers at restaurants, pubs and cinemas small fractions of pre-Covid levels.

"With surveys showing that households remain very fearful of contracting the virus, social distancing rules likely to limit the consumption of services until the population is vaccinated and employers set to lay off many furloughed workers in the autumn, we think that GDP still will be about 5 per cent below its pre-Covid level by the end of this year."

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