Sharp economic contraction in the first quarter of 2020 is an ominous sign of things to come 13 May 2020 GDP fell by 2 per cent in the first quarter of 2020, its sharpest contraction since the peak of the financial crisis (Q4 2008), giving an ominous early indication of the scale of the economic hit the UK is currently experiencing the Resolution Foundation said today (Wednesday) in response to the latest ONS GDP figures. The Foundation notes despite the UK lockdown only starting on 23 March, it was enough to drive a sharp fall in quarterly fall in GDP growth, including a 5.8 per cent fall in March alone, the weakest single-month fall in GDP on record. With the UK expected to be in full or partial lockdown for the entirety of Q2 (April-June), a huge economic fall – and an unprecedented recession – is on the cards. The Bank of England and OBR scenarios point to falls of 25 per cent and 35 per cent respectively. James Smith, Research Director at the Resolution Foundation, said: “The lockdown was only in place for seven working days in the first three months of the year. But it was still enough to bring about the biggest quarterly economic contraction since the peak of the financial crisis and the weakest single-month change on record. “With the country in full or partial lockdown well into the second half of the year, the grim economic milestones hit in the latest data will be shattered next time around. “Today’s figures serve as a reminder as to why a bold economic policy response has been needed. That approach will need to continue as Britain begins the long road out of this economic crisis.”
