Economy shrank as third lockdown hit in November, according to latest ONS data

15 January 2021

Coronavirus continued to impact the economy at the end of last year, with the latest Office for National Statistics (ONS) figures showing the economy shrank by 2.6% in November as fresh lockdown restrictions were introduced in England.

The ONS said it meant gross domestic product was 8.5% below its pre-pandemic peak and came after six months of growth.

The services sector was hit hardest, although some manufacturing and construction activity improved. The closure of businesses such as pubs, hairdressers and many shops meant the sector contracted by 3.4%. The services sector is now 9.9% below the level of February 2020, the ONS said.

Suren Thiru, British Chambers of Commerce Head of Economics, said: “The latest figures highlight the continued damage being done to the UK economy by Coronavirus. 

“The decline in output in November was largely driven by the drag on activity from the second lockdown, with consumer-focused services firms, who are most exposed to lockdown restrictions, enduring a particularly difficult month.   

“With any post-lockdown rally in output in December constrained by the tougher tiered restrictions, including the introduction of Tier 4 measures, the UK economy is likely to have contracted in the final quarter of 2020.  

“A third lockdown means that a double-dip recession in the first quarter of this year may be inevitable, particularly if the current post-Brexit disruption persists through the quarter. 

“A clear and comprehensive plan is urgently needed to support the economy throughout this year. This should include closing the current gaps in Government support and providing more significant grant funding to support cash strapped businesses. A fit-for-purpose Test, Trace and Isolate system remains critical to keeping the economy moving once the current lockdown ends.”