span>Friday/span>12th February 2021 - 08:17 (GMT)
Initial estimates released by the Office for National Statistics (ONS) have indicated the UK economy grew by 1% over the final quarter of 2020. This was double the 0.5% consensus and means the country narrowly avoids a double-dip recession. Monthly output also outperformed expectations - increasing by 1.2% in December, but remains 6.3% below its pre-crisis peak.
Boosted by the easing of restrictions across many parts of the UK in early December, there were significant increases in accommodation and food service activity. The healthcare sector also contributed positively, mainly due to an uptick of coronavirus test and trace schemes across the country.
Over the year 2020 as a whole, GDP contracted by 9.9% and marked the highest annual fall in post-war history. The figures also represent the largest economic fall within any G7 country, particularly stark when compared to the US (2.5%) and Germany (3.9%).
Conversely, GBP is one of the best performing currencies in the early part of 2021 and remains on course to test key levels of resistance against both the euro and US dollar. Its resurgence was initially driven by the UK avoiding a hard Brexit at the tail-end of 2020 and then pushed further by a cooling of negative interest rate chatter from the Bank of England. The implementation of an effective coronavirus vaccination programme saw more investment flow into GBP as a feasible end to the pandemic is firmly in sight.
Attentions now turn to the next UK budget announcement on the 3rd March, with many anticipating further emergency measures to help support businesses and individuals through one of the most testing times in recent history.
Chancellor of the Exchequer Rishi Sunak stated this morning: “While there are some positive signs of the economy’s resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses. That’s why my focus remains fixed on doing everything we can to protect jobs, businesses and livelihoods. At the Budget I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the next phase of pandemic.”
