After spending a whole month in coronavirus lockdown, the UK economy has shrunk by 20.4% in April, the largest monthly contraction ever recorded by the country.
According to the Office of National Statistics (ONS), the historic 20.4% contraction by the UK economy affected virtually all areas of economic activity. The decline is three times bigger than the contraction observed during the 2008 to 2009 economic crisis.
However, analysts say that this would likely be the worst month for the UK as the government started to ease on the lockdown in May. The ONS also published figures for the months of February to April, indicating a decrease of 10.4% compared with the previous three-month period.
British Prime Minister Boris Johnson said he was "not surprised" by the numbers and argued: "We've always been in no doubt this was going to be a very serious public health crisis but also have big, big economic knock-on effects.”
"The UK is heavily dependent on services, we're a dynamic creative economy, we depend so much on human contact. We have been very badly hit by this," the prime minister added.
The news of the contraction coincides with the increase in the number of people claiming unemployment benefit by 856,500 to 2.1 million during the same month. Also, almost nine million employees are having their wages paid by the UK government.
The economic figures
Jonathan Athow, deputy national statistician for economic statistics at ONS, said: "[The fall was] more than three times larger than last month and almost 10 times larger than the steepest pre-Covid-19 fall."
"In April, the economy was around 25% smaller than in February," Athow pointed out.
He explained that all economic areas were virtually impacted, with pubs, education, health and car sales making contributing largely to the decline. He mentioned that car manufacturers and house builders were also affected.
However, Athow explained: "It's highly likely April will be the low point. Our own surveys and wider indicators have suggested a pick-up in economy activity, but I think it's really too early to know how quickly economic activity will recover in the coming months."
What keeps the economy afloat?
While the UK economy has taken a big hit from the coronavirus pandemic and the lockdowns that came with it, it has continued to survive partly due to the extraordinary levels of state intervention.
The government's furlough scheme covered more than one in four UK workers or approximately 8.9 million people, allowing them to receive 80% of their monthly salary up to £2,500, costing around £19.6 billion so far.
A similar scheme is being implemented for self-employed workers, with 2.6 million claims made at present worth £7.5 billion.
These measures supported household consumption, which composes nearly two-thirds of the UK's gross domestic product (GDP). Without them, it would have contracted even further.
Chancellor Rishi Sunak said: "In line with many other economies around the world, coronavirus is having a severe impact on our economy."
"The lifelines we've provided with our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs - giving us the best chance of recovering quickly as the economy reopens," Sunak added.
The chancellor pointed out that once High Street shops could reopen, life would get "a little bit more back to normal".
