The worst performance of the UK economy in 2020 in over 300 years
Data released by the National Bureau of Statistics (ONS) shows that the UK economy recovers stronger than expected, showing higher household savings than previously proposed figures.
The ONS said the UK economy rose 16.9% in the third quarter of 2020 and 1.3% in the fourth quarter, up from its initial forecast of 16.1% and 1%.
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Analysts say a stronger recovery than expected is a signal that the UK can grow more than this fiscal year.
However, ONS explained the strong second half of 2020, saying that the recession in the first half of this year is more important than previously thought.
GDP fell 19.5% in the second quarter of 2020, exceeding the initial forecast of 19%.
Throughout the year, the UK economy has shrunk by 9.8% and 0.1% lower than expected, but it is the UK’s worst performance for over 300 years.
Disposable income remained stable in 2020, up just 0.1%, adjusted for inflation. The lack of opportunity to spend money on lockdown meant that many homes had collected savings above ONS’s initial estimate.
Cash saved as a percentage of disposable income, also known as the savings rate, rose from 14.3% in the third quarter of 2020 to 16.1% in the fourth quarter.
Philip Shaw, an economist at investment firm Investec, commented: “Estimates of excess or pent-up savings amount to £121 billion, equivalent to nearly 10% of total household consumption under cash terms last year.”
This means that households will surge from their strongest positions to their weakest positions.
The show told the Guardian that it expects a third lockdown in the first quarter of 2021 to push GDP down 1.8%, followed by a rebound that will increase in GDP in 2021.
The UK economy was recorded among the biggest contractions of all large countries in the Economic Co-operation and Development Agency, as only Spain and Argentina reporting dips.
