Northern economies contract the most and UK debt exceeds 104% of GDP

Reading Time: 2 minutes

A nowcast for the UK ‘regions’ for the 12 months ended September 2020 on a rolling 4 quarter basis, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the North East was ‘best’ with a fall of 6.5%, with Wales’s 11.4% contraction the ‘worst’; the UK decline according to these figures was c8%.

However, the total percentage change in each region’s GDP relative to the end of 2019 has the East of England ‘best’ at -4% compared with -8% across the UK, and about -16% in the North East.

ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’) and has highlighted that during these unprecedented times, with differing lockdowns, there is no historical data that their model can use to fully understand how the pandemic will impact regional economies. Consequently the partnership emphasises the uncertainties that exist with their nowcast at this time.

ONS GDP to March 2020

Official ONS figures for an earlier period which reflects the start of the Covid 19 turmoil show each regions performance relative to other parts of the UK.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended March 2020 with the same quarter a year earlier. These showed London topped the table with growth of 1.5% whilst UK growth over the same period was -2.2%. The West Midlands was the worst performer and grew by -5.3%. London was the only region to show positive growth.

In the same report, the ONS’s figures for the standalone quarter to March 2020 showed no region recorded positive growth. London was top with quarterly growth of -1.5% whilst Northern Ireland was bottom, posting growth of -4.5%.

UK stats

UK GDP grew by +15.5% in the three months to September 2020 with GDP growth slowing to 1.1% in September itself. Over the quarter, services were up by 14.2%, construction up by 41% and production was up by 14.3%. Annually GDP has fallen by 9.6%.

According to Eurostat, GDP increased by 12.6% in the euro area and by 11.6% in the EU27 during the third quarter of 2020. This meant that annually GDP fell by 4.4% in the euro area and by 4.3% in the EU27.

Key European economies came out of lockdown earlier than the UK and are recovering more quickly. Over the quarter the data showed that the German economy grew by 8.2%, France by 18.2%, with Italy up by 16.1%. Annually, Germany contracted by 4.2% and France by 4.3% with a 4.7% decline recorded in Italy. The Swedish economy grew by 4.3% over the quarter which meant an annual contraction of 3.5%.

The UK labour market, supported by the Job Retention Scheme, is deteriorating, with the level of employment falling by 164,000 to 32.51m and the level of unemployment rising by 243,000 to 1.62m or 4.8%.

The euro area unemployment rate was 8.4% in October 2020, with the EU27 rate at 7.6%. The lowest unemployment rate in October 2020 was 2.9% in the Czech Republic and the highest was 16.8% in Greece.

UK inflation was 0.7% in October 2020 with Euro area annual inflation at -0.3% and European Union annual inflation at 0.3%.

The UK public sector deficit in October was £22.3bn, £10.8bn more than in October 2019. Debt at the end of October 2020 was £2,076bn which was 104.7% of GDP.