The economies of the devolved nations and London contract the quickest and the UK piles up debt at the fastest rate since records began in 1984

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A quarterly nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) for the 3 months ended March 2020, which captures the start of lockdown, has estimated that the contractions in the UK ‘regional’ economies ranged from -1% in the East Midlands to -3.9% in Northern Ireland; the UK decline was 2%.

On these estimates, of the 12 UK ‘ regions’ the three devolved nations fared worse than the national average as did UK powerhouse London which declined by 2.2%.

For the 12 months ended March 2020 on a rolling 4 quarter basis, ESCoE has estimated that growth in London (ranked first) was 1.8% and growth in the East Midlands (ranked twelfth) was -0.6%; over the same period UK growth was 0.5%.

ONS GDP to September 2019

Official ONS figures for six months earlier, the year to September 2019, which reflects Brexit uncertainty rather than Covid 19 turmoil, show London again topping the table with growth of 5% whilst UK growth over the same period was 1.2%. The West Midlands was the worst performer and contracted by 1.5% with the East of England and the North West of England the other two ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures also highlighted that London was top over the quarter to 2019, with growth of 1.4%. This compared with the North West, Northern Ireland and the South East contracting by 0.2% with the East Midlands posting a drop of 0.3%.

UK stats

UK GDP fell by 2% in the three months to March 2020 with GDP declining by 5.8% in March itself. Over the quarter, services were down by 1.9% (March -6.2%), construction fell by 2.1% (March -5.9%) and production was down by 2.1% (March -4.2%).  

Also household consumption fell by 1.7%, the biggest drop since December 2008. Annual growth was -1.6%, the biggest fall since Quarter 4 2009, when it also fell by 1.6%.

According to Eurostat, GDP fell by 3.8% in the euro area and by 3.3% in the EU27 during the first quarter of 2020. This meant that annually GDP fell by 3.2% in the euro area and by 2.6% in the EU27.

Key European economies are now feeling the effects of the March shutdown, with the shocking data now flowing through. Over the quarter the data showed that the German economy fell by 2.2%, France contracted by 5.8%, with Italy shrinking by 4.7%. Annually, Germany contracted by 2.3% and France by 5.4% with a 4.8% decline recorded in Italy. The Swedish economy contracted by 0.3% over the quarter which meant annual growth was +0.5%.

The UK labour market data does not yet reflect lockdown and was largely unchanged, with the pre-pandemic level of employment increasing to a joint record high of 33.14m and the level of unemployment stable at 1.35m or 3.9%.

The effects of lockdown though can be seen in the vacancies figure. There were an estimated 637,000 vacancies in the UK in February to April 2020; this is 170,000 fewer than the previous quarter and 210,000 fewer than a year earlier.

The euro area unemployment rate was 7.4% in March 2020, with the EU27 rate at 6.6%. The lowest unemployment rate in March 2020 was 2% in the Czech Republic and the highest was 16.4% in Greece.

UK inflation was 0.8% in April 2020 down from 1.5% in March. Key downward contributions came from transport (includes fuel) with the biggest risers being recreational goods.

Euro area annual inflation was 0.3% in April, down from 0.7% in March. European Union annual inflation was 0.7% in April 2020, down from 1.2% in March. A year earlier, the Euro area rate was 1.7%.

The UK public sector deficit in April was £63.5bn, £73.3bn more than in April 2019, the highest cash requirement in any month since records began in April 1984. Debt at the end of April 2020 was £1,888bn which was 97.7% of GDP, an increase of £118bn or 17.4% on April 2019; the largest year-on-year increase in debt as a percentage of GDP since monthly records began in March 1993.

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