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Economic Impact

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UK GDP falls by 19% in the three months to May 2020

Gross domestic product (GDP) fell by 19.1% in the three months to May 2020, according to the Office for National Statistics (ONS). This follows falls of 10.8% in April and 2.2% in March.

All the main sectors in the economy also saw falls in the most recent reported period. The biggest drop – unsurprisingly – was in accommodation and food services, which fell by -71.7%. Manufacturing fell by -18%.

Commenting on today’s GDP figures, Jonathan Athow, Deputy National Statistician for Economic Statistics, said:

“Manufacturing and house building showed signs of recovery as some businesses saw staff return to work. Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck.

“In the important services sector, we saw some pickup in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”

Read the full ONS report here.

Impact of COVID-19 on working household incomes – analysis from HM Treasury

HM Treasury has published its analysis on the estimated short-run change in working households’ net incomes between two points in time, plus government interventions that have a direct, quantifiable impact on households.

The greatest impact is seen on higher income households. NB It does not capture the potential long-run impacts of the pandemic.

Read the analysis here (PDF).

ONS releases GDP quarterly national accounts: January to March 2020

Revised quarterly estimates of gross domestic product (GDP) for the UK were released on 30 June.

UK gross domestic product (GDP) in volume terms fell by 2.2% in Quarter 1 (Jan to Mar) 2020, revised downwards by 0.2 percentage points from the first quarterly estimate.  This is the largest fall in UK GDP since Quarter 3 in 1979.

When compared with the same quarter a year ago, UK GDP decreased by 1.7%.  This release captures the first direct effects of the coronavirus (COVID-19) pandemic, and the government measures taken to reduce transmission of the virus.

The report also examines output and production for Q1 – read the full report.

Next release date: 12 August

ONS research into social impacts of coronavirus

The Office of National Statistics (ONS) has published a new piece of research on the social impacts of coronavirus, covering the period 18 June to 21 June 2020. The main findings are that:

  • Over one-quarter (26%) of people who had left their home this week did so to meet with people in a personal place, such as visiting family and friends at home; this has increased from 13% last week.
  • The proportion of working adults who reported they had travelled to work in the past seven days increased to 44% this week from 41% last week.
  • Almost half of adults (43%) reported that there were some aspects of their lifestyle that had changed for the better since the coronavirus (COVID-19) pandemic.

Of those who reported that some aspects of their lifestyle had changed for the better, over half (56%) said that they were now able to spend more quality time with people they lived with, while 50% were enjoying a slower pace of life and 47% preferred that they were spending less time travelling.

The full report can be read here.

ONS reports UK GDP fell by 10.4% in the three months to April 2020

Official statistics from the Office for National Statistics (ONS) showed Gross Domestic Product (GDP) fell by 10.4% in the three months to April, as government restrictions on movement dramatically reduced economic activity.  This is the UK’s worst monthly GDP fall on record, as coronavirus damaged the economy.

ONS figures also showed GDP growth fell by 20.4% in April, following a 5.8% fall in March. The monthly decline in GDP in April, when the country was in full lockdown, is three times greater than the fall experienced during the 2008 to 2009 economic downturn and was worse than economists had forecast.

The retail, travel and hospitality industries were all hit hard, as was manufacturing and construction.  The figures show the huge task facing the UK economy as the government seeks to ease lockdown restrictions.

The ONS said the economy had suffered a huge shock since the start of the cornavirus pandemic in March when the country was forced into lockdown.

Household spending prevented during lockdown, according to ONS

More than one-fifth of usual household spending has not been possible during the lockdown, the Office for National Statistics (ONS) analysis revealed (11 June 2020).

In the financial year ending March 2019, UK households spent an average of £182 per week on activities that have since been largely prevented by government guidelines (such as travel, holidays and meals out).

This is equivalent to 22% of a usual weekly budget of £831, money that households could be saving, spending in other areas or using to cover any loss of income.

Across all households, more than half (53%) of usual spending covers “non-discretionary” (essential) items such as food and housing costs.

Younger households, those who are renting and those living in London spend a lot proportionally on essentials and relatively little on goods and services that have been unavailable under lockdown.

Read the full report here.

Coronavirus and the latest indicators for the UK economy

The Office of National Statistics (ONS) released its latest Coronavirus, the UK economy and society faster indicators on 28 May.  This rapid response survey uses new data and experimental indicators to research the UK economy and society.

The headline points are:

79% of businesses in the UK had applied for the Coronavirus Job Retention Scheme, whilst 42% of businesses had less than six months of cash reserves.

Of the 14% of businesses who reported they had paused trading but are intending to restart trading in the next two weeks, they expect 31% of their workforce will return from furlough leave.

There was a fall in the proportion of people in Great Britain staying at home (other than leaving for work, exercise, essential shopping or medical need) from 81% between 14 to 17 May to 73% between 21 to 24 May.

Online job adverts declined by more than 50% from the start of March to the start of May 2020.

Overall, prices of items in the high-demand products (HDP) basket decreased by 0.1% between the week ending 17 May 2020 and the week ending 24 May 2020.

The full report can be read here.

Analysts opinion

PwC offers practical advice to keep your business resilient

PwC has uploaded a series of podcasts which “explore the latest developments” and give “practical advice to help keep your business resilient”.

As the world responds and adapts to COVID-19, their podcast series invites industry experts to look at the steps businesses can take.

The podcasts cover subjects such as ‘Protecting your working capital’ and ‘Leading through a crisis’ – they are available on desktop or mobile devices.  You can subscribe to keep up-to-date with all the latest episodes.

Access the series here.

State of the economy – report from the Scottish Government

The Scottish Government’s Chief Economist has published a report on recent developments in the global, UK and Scottish economies, and provides an analysis of the performance of, and outlook for, the Scottish economy.

The section on the tourism industry notes that the impact of Coronavirus on Scotland’s tourism sector has been rapid. Industry feedback indicates the shock has created significant challenges for businesses’ operating conditions.

Read the report below:

Savills’ second Global Market Sentiment Survey

In its second Global Market Sentiment Survey, Savills measures the change in market sentiment over the first half of April.

The survey, which provides a snapshot of current market conditions across 31 global country markets, reveals:

  • Market activity is returning in China
  • Global transaction activity is no longer falling as sharply.
  • Rents remain unchanged across 60% of sectors and countries globally, supported in part by the extensive use of concessions.
  • Government assistance such as reduced property taxation or temporary bans on evictions were reported in 59% of the countries surveyed.

Read the report