UK economy contracted 1.5% in first quarter due to lockdowns
Commuters walk the Thames Path with a view of Tower Bridge in London, UK on Monday 14 December 2020.
Hollie Adams | Bloomberg via Getty Images
LONDON – The UK economy contracted 1.5% in the first quarter of 2021 as nationwide lockdown measures continued to weigh on activity, preliminary estimates announced on Wednesday.
Economists polled by Reuters had expected GDP to shrink by 1.7%. There were severe restrictions in the first three months of the year as the country tried to contain spiraling Covid-19 cases.
However, with the lockdown measures expiring and the economy reopening, the country is expected to recover significantly for the remainder of the year.
The International Monetary Fund predicts UK GDP will grow 5.3% in 2021, partially rebounding from the previous year when the economy saw its largest annual decline since the Great Freeze of 1709.
Prime Minister Boris Johnson announced Monday that the next stage of easing relief will take place on May 17 as planned, with international travel permitted in most cases and restaurants having the option to welcome customers indoors, a lifeline for the dominant one Service industry in the country.
The economy grew by 2.1% in March compared to the previous month, slightly exceeding expectations. According to the Office for National Statistics, GDP at the end of 2019 is now 8.7% below pre-pandemic levels. Year-on-year, GDP contracted by 6.1% in the first quarter.
Both services and output declined in the first quarter, but construction output rose.