UK Economy Has Worst Economic Year in 300 Years

By Thomas Price Friday, February 12, 2021

The COVID-19 pandemic has severely affected companies and businesses all over the world. This is especially true for the companies headquartered in nations that imposed harsh lockdowns. The United Kingdom (UK) in particular was one of those nations, posting the worst economic year in centuries in 2020.

UK flag among London skyscrapers.

UK’s Final Quarter of 2020

The United Kingdom recently released information on the nation’s Q4, and while there was finally some economic growth, as businesses and companies have begun the slow climb back to recovery, those gains were dwarfed by the year of losses.

In Q4 of 2020, the UK reported a 1% growth of its gross domestic product. Even with this growth, the nation’s GDP was more than 6.6% behind the same quarter in 2019. When broken down by sector, businesses in the service industry grew by 0.6%, companies in the production sector grew by 1.8%, and the construction business grew by 4.6%.

The Q4 results from the UK actually beat out most analyst expectations, who only projected economic growth of 0.5%; however, 2020 proved to be a more economically devastating year than initially expected.

2020 and Looking Forward to 2021

In fact, when looking at the UK over the entirety of 2020, the national economy shrank by a whopping 9.9%. This figure unfortunately outpaced analyst predictions of an economic downfall of 8%, with the return of harsh lockdowns in the final months of year hurting holiday business for all types of companies.

The economic shrink in 2020 has been historically bad. In fact, the UK has not had a worse economic decline over the course of a year since 1709, when the nation posted a 13.34% contraction. While the situation remains dire for the many business types headquartered in the UK through the first few months of 2021, there is optimism looking forward as vaccine rollout has continued to move quickly thus far.

In fact, according to Hitesh Patel, a portfolio manager at investing company, Quilter Investors, the UK should be looking at a strong rebound for business in the second half of the year as lockdowns should begin easing at a quick pace if the vaccine rollout continues to ramp up.

The Bank of England also predicts economic recovery in 2021 with slightly more optimism from the financial company putting major growth on a timeline beginning in the spring.

Enforcing this further are the comments from the deputy governor of the Bank of England, Andy Haldane, who, when writing in the Daily Mail, said, “By the end of March, based on the current pace of vaccine rollout and government data on vulnerable groups, this risk may have been reduced by as much as three-quarters and by the end of the second quarter it will be even smaller. As health concerns fall and restrictions lift, people are expected to return to spending and socialising.”

About the Author

Headshot for author Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

Related Articles