UK Suffers Record-Breaking Contraction Amidst Coronavirus Pandemic

The Coronavirus has ravaged the global economy since March of 2020. Every nation on the planet has been affected by the virus, but none more so than the UK. The world leader saw a record-setting contraction of 9.9% coming into 2021. 

This 9.9% shrinking of the economy is a figure that hasn’t been seen in more than 300 years. This serves as an indicator of how badly the UK is suffering under the effects of a continued lockdown. 

It’s Not All Bad

While a year on year decrease in output of that much is a disastrous figure for the UK, it’s not the be-all and end-all of the collective’s economy. 

The UK’s GDP grew 1% between October and December of last year, meaning that West Minster managed to narrowly avoid a recession that could have potentially destroyed any hopes of economic recovery in the near future. 

This growth towards the end of 2020 hopefully indicates a recovery period coming to the UK in 2021. With many global economies continuing to break through the impact of Coronavirus, it would be difficult for the UK to compete if it falls behind. 

Bad Timing

While the Coronavirus is the main factor in the UK’s recent financial and economic troubles, it’s far from the only reason the British Commonwealth is suffering. The timing of Brexit to line up with the pandemic spelled double trouble for the English economy. 

With West Minster’s decision to push through with Brexit despite the global pandemic, the economy had to absorb the damage dealt by two separate incidents that threatened to plunge the country into a recession. 

Through these lenses, a 9.9% decrease in GDP doesn’t seem like too unrealistic of a number, especially when you consider the fact that the country is on a recovery after narrowly avoiding a recession. 

The Troubles Aren’t Over

While there is a recovery on the horizon, the people of Great Britain are going to have to struggle through some more economic hardship before it can be reached. 

The Bank of England is predicting a 4.0% shrinkage between January and March of 2021 as a result of another lockdown, as well as the lingering impact of Brexit. 

The GDP for the UK was 6.3% lower in February 2021 than it was in 2020, which means we might yet see another record loss for the British economy depending on how the start of this year is handled.

Recovery in Sight

The Bank of England isn’t serving as just the bearer of bad news, though. According to statements from the financial conglomerate, there is an expectation of seeing the economy recover to pre-COVID-19 levels in 2022. 

However, many industry-leading economists disagree with this sentiment, believing it’s going to take a good while longer for the British economy to see any sort of real recovery. 

The Other Major Economies

It’s important to remember that it isn’t just England that has been affected so heavily by the Coronavirus. While it is one of the hardest-hit major economies, it hasn’t suffered the most. 

Spain, which was a notorious hotspot when the pandemic first surfaced in Europe, suffered shrinkage of 11%, two percent higher than the damage suffered by Britain. 

The large impact that the virus has taken on the British economy serves to highlight how reliant England’s economy is on face-to-face services. With retail being dealt such a massive blow, Britain must expect to endure more lasting damage than other service-based economies.