In 2020 the UK economy suffered its worst annual decline in 300 years. GDP fell by 9.9 per cent, the biggest annual drop since the Great Frost of 1709. Britain had one of the worst GDP declines among developed countries – worse than France, Germany or the US.
Despite a successful vaccination campaign and a rebound in the last quarter of 2020, the British economy is still feeling the impact of the Covid-19 pandemic. Britain’s decision to leave the European Union has put additional strain on trade; the European Commission has estimated that the impact of Brexit on the UK economy will cost Britain 2.25 per cent of its GDP by 2022.
The New Statesman is tracking a number of different economic indicators to show how Britain’s economic recovery strategy is playing out. This page will be updated monthly as new data is released.
How is Britain’s economy growing compared with other countries?
Lockdown restrictions, limits on mobility and Brexit have all put pressure on the British economy.
In the graphic below, we’re using figures from the Office for National Statistics (ONS) to show how Britain’s GDP has changed each month since October 2019, when the effects of the pandemic and Brexit were not yet fully visible.
We’re also showing GDP figures for 45 other countries, published by the Organisation for Economic Cooperation and Development (OECD). These figures are updated quarterly, so they may lag behind the UK’s latest indicators and, since they cover larger periods, may smooth out monthly variations.
How has employment in Britain changed?
The furlough scheme has helped the country avoid a sharp rise in unemployment and retain a largely stable labour market, although there was still a significant fall in the number of workers in 2020.
Economists expect a steep increase in unemployment when the furlough scheme finally ends in the autumn, partially due to some businesses not reopening or changing business models.
Have house and rent prices increased?
The housing market stagnated during much of the pandemic, but a surge in demand and the stamp duty holiday boosted prices in the summer of 2020. Rent prices have continued to grow, almost unaffected.
We’re using figures from the Land Registry and the ONS to track the evolving property market and how it is affected by the economic recovery strategy.
Is retail spending on track for recovery?
Lockdowns and mobility restrictions have directly led to a drop in retail sales, although the experience varies dependent on the type of store. Some, such as food stores and household goods stores, have generally fared better than pre-pandemic times as people spent more time indoors. On the other hand, the sale of clothes and fuel are yet to recover to meet 2019 levels.
Rishi Sunak’s Budget this year promised to support the retail, hospitality and leisure sectors via grants as well as an extension of the business rates holiday. Our tracker looks at whether those decisions will manage to get people back into stores.
How is Brexit affecting trade?
Pandemic-related disruption has led to a drop in trade, with both EU and non-EU partners. Brexit has also greatly reduced trade with the EU, especially exports.
British and European firms will need time to adjust to the new reality of harsher border checks and higher duties and fees, after which we could see trade levels normalise. Small and medium-sized companies may be the slowest businesses to adapt. Our tracker will follow the changes in trade.
How are businesses dealing with Brexit and the pandemic?
IHS Markit creates the UK Regional PMI, an index of how optimistic businesses are based on a series of monthly surveys sent to respondents in the nine English regions, Scotland, Wales and Northern Ireland.
These indices, presented in the graphic below, vary from 0 to 100, where a reading of 50 shows an improvement over the previous month, with figures below 50 indicating the situation is worsening.
The Business Activity Index is the main PMI indicator, showing overall business health. Other indicators measure how businesses feel about various aspects of their activity.
We will continue to track the British economy every month and update the charts as new data comes in.