The British economy went into reverse in February as GDP growth declined by 0.1%, even before the onset of the coronavirus pandemic that brought the country to a halt.
Analysts said the figures would bear little relation to those for March, which were likely to show a much steeper fall in activity and the economy entering a deep recession. On a three-month rolling basis, the economy grew by 0.1% between December and February.
The services sector, which encompasses industries from banking to restaurants, posted 0% growth in the month. The manufacturing industry, hit hard by Brexit uncertainty during much of 2019, bounced back to grow by 0.5% in February, but the construction industry recorded a dive in activity of 1.7% related to bad weather across the country.
UK government support for workers and businesses during the coronavirus crisis
Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.
Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.
Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.
Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.
Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.
Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.
Local authorities to get a £500m hardship fund to provide people with council tax payment relief.
Mortgage and rental holidays available for up to three months.
Samuel Tombs, the chief UK economist at consultancy Pantheon Macroeconomics, said the stagnation of GDP in the first two months of 2020 showed that talk of a post-election Boris bounce “was just hot air”.
“February’s data are largely free of any Covid-19 impact, with only travel agents and warehouse operators noting a material hit to demand or supply,” he said.
“Admittedly, the small month-to-month drop in GDP was driven largely by a hefty 1.7% decline in construction output, which can be attributed to exceptionally high rainfall, an unprecedented three times its seasonal norm. Nonetheless, sluggishness was broad-based, with services output flat and industrial production merely rising by 0.1%.”
Rob Kent-Smith from the Office for National Statistics said another measure of the weak state of the economy was a sharp decline in imports from the EU.
“The underlying trade balance moved into surplus in the latest three months, the first seen since comparable records began over 20 years ago. This surplus was caused by a large fall in goods imported from EU countries,” he said.
The general secretary of trade union body the TUC, Frances O’Grady, said: “Even before the coronavirus crisis hit, our economy needed a change of direction.
“While the priority now is to contain the spread of the virus, today’s figures highlight the need for a robust recovery strategy. We must tackle longstanding economic inequalities, not reinforce them.”
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