The UK’s economy shrank by 2% in the three months to 31 March 2020, as a result of the Covid-19 pandemic.
This is according to new data from the Office for National Statistics (ONS), which also found that gross domestic product (GDP) fell by 5.8% during March, the largest fall since monthly records began in 1997. This reflected widespread falls in services, production and construction output.
Notably, the ONS said the slump in GDP in March 2020 occurred within a single month. During the global financial crisis, from the peak in February 2008 to the lowest point of March 2009, a total of 13 months, GDP contracted 6.9%.
Despite this, there was an increase in consumer demand for some goods, mainly because of the effects of retail “panic buying”, which led to growth in a small number of manufacturing industries.
The retail industry saw GDP fall by 5.1%, the largest fall since retail sales records began in January 1996. Food stores and non-store retailing were the only sectors to show growth in the monthly volume series in March 2020, with food stores seeing the strongest growth on record, at 10.4%.
It comes as total retail sales tumbled by 19.1% in the four weeks ended 2 May, according to the latest BRC-KPMG Retail Sales Monitor. This was a notable decrease against the 2.4% sales increase recorded the year prior, and the “worst decline recorded” since the monitor began in January 1995.
Paul Martin, UK head of retail at KPMG, said: “Aside from ‘essential’ retailers still operating physically, consumers have had little alternative but to log-on, and online sales were up nearly 60%.
“The disparities in retail continue, not only between ‘essential’ and ‘non-essential’, but also between those with an online channel and those without.”