Virus-hit UK Economy Shrinks 20% In April

Britain's economy shrank by more than a fifth in April from March, official data showed on Friday, as the first full month of coronavirus lockdown ravaged activity.

Gross domestic product nosedived by a record 20.4 percent from the previous month, after a 5.8-percent contraction in March, the Office for National Statistics said.

The April's figure was 24.5% smaller than that of the same month last year.

Both readings were below the unprecedentedly weak forecasts in a Reuters poll of economists. The Office for National Statistics said the economy had shrunk back to its size in 2002.

"This is catastrophic, literally on a scale never seen before in history," Paul Johnson, director of the Institute for Fiscal Studies think tank, said. "The real issue is what happens next."

Finance minister Rishi Sunak said: "In line with many other economies around the world, coronavirus is having a severe impact on our economy."

The UK government had imposed a lockdown on March 23 in an attempt to halt the spread of Covid-19, and also stepped in to back up employee wages in a costly "furlough" jobs retention scheme.

However, the Organisation for Economic Co-operation and Development says Britain – with its huge services industries which are hit hard by social distancing measures – could suffer the worst downturn among the countries it covers, with an 11.5% contraction this year.

Sunak said the 133 billion pounds of extra spending and tax cuts he has rushed out meant Britain had "the best chance of recovering quickly as the economy reopens".

Much of Britain's retail sector is due to open its doors next week and the government last month urged people who could not do their jobs at home to return to work as lockdown restrictions are gradually lifted.

Bank of England (BOE) Governor Andrew Bailey – who has warned of the deepest recession in three centuries this year – said on Wednesday he could see some signs of a recovery but long-term economic damage remained likely.

The BOE is expected to announce a fresh increase of at least 100 billion pounds in its bond-buying firepower next week. (AFP, Reuters)