Britain’s GDP falls 20.4% in April as economy is paralysed by lockdown

Latest figures reflect many businesses closing down and workers on placed on furlough

The M5 motorway at Highbridge in Somerset on 22 April




The M5 at Highbridge in Somerset on 22 April is a stark example of the effect of the coronavirus lockdown.
Photograph: Ben Birchall/PA

Britain’s economy slumped by 20.4% in April in the biggest monthly decline since records began, as the coronavirus lockdown paralysed the country.

Official figures for gross domestic product (GDP), the broadest measure of economic prosperity, from the Office for National Statistics showed the impact of measures that forced businesses across the UK to close and millions of workers to be put on furlough.

Revealing the scale of the economic downturn in the first full month of lockdown, April was a particularly tough month for employees and companies, with vast swathes of the UK economy unable to operate.

Virtually no area of the economy was left unscathed as people were told to stay at home to prevent the spread of Covid-19 and businesses closed. Britain’s dominant services sector shrank by a fifth, fuelled by the closure of the high street, evaporating sales of cars, as well as pubs, restaurants and hotels.

Faced with disruption to international supply chains and the need to protect workers, shutdowns in production at many factories and the running of reduced hours at others led manufacturing output to fall by a quarter. With cranes and diggers across the country falling idle as the virus spread, construction output plunged by 40%.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost 10 times larger than the steepest pre-Covid-19 fall.”

Although some lockdown measures are now being eased, the snapshot from the ONS shows Britain’s economy at the onset of the deepest recession in living memory, in a crash far outstripping the worst damage recorded in the 2008 financial crisis.

Over the wider three-month period to the end of April, GDP fell by 10.4%, as government restrictions on movement dramatically reduced economic activity. Alongside the domestic hit to activity as Boris Johnson’s government imposed harsh restrictions on business and social life, the ONS said the UK’s trade with the rest of the world was also badly affected by the pandemic. There were large falls in the import and export of cars, fuels, works of art and clothing.

Q&A

Which UK companies are cutting jobs in the coronavirus crisis?

The coronavirus lockdown has virtually halted international travel and tourism, hitting airlines and other travel companies, aerospace and auto manufacturers and oil companies hard.

As these businesses adjust to dramatically reduced revenue projections, job losses are starting to mount alarmingly. More than 40,000 redundancies have already been announced across these sectors, with more than 10,000 likely to be in the UK.

Rolls-Royce
The jet-engine manufacturer has confirmed that 3,000 job cuts, of a planned 9,000 worldwide, will be made in the UK. Rolls-Royce will make the first round of redundancies through a voluntary programme, with about 1,500 posts being lost at its headquarters in Derby, as well as 700 redundancies in Inchinnan, near Glasgow, another 200 at its Barnoldswick site in Lancashire, and 175 in Solihull, Warwickshire.

Bentley
The luxury carmaker intends to shrink its workforce by almost a quarter, slashing 1,000 roles through a voluntary redundancy scheme. The majority of Bentley’s 4,200 workers are based in Crewe in Cheshire.

Aston Martin Lagonda
The Warwickshire-based luxury car manufacturer has also announced 500 redundancies.

BP
The oil company plans to make 10,000 people redundant worldwide, including an estimated 2,000 in the UK, by the end of the year. The BP chief executive, Bernard Looney, said that the majority of people affected would be those in office-based jobs, including at the most senior levels. BP said it would reduce the number of group leaders by a third, and protect the “frontline” of the company, in its operations.

British Airways
The UK flag carrier is holding consultations to make up to 12,000 of its staff redundant, a reduction of one in four jobs at the airline. BA intends to cut roles among its cabin crew, pilots and ground staff, while significantly reducing its operations at Gatwick airport.

Virgin Atlantic
Richard Branson’s airline is to cut more than 3,000 jobs, more than a third of its workforce, and will shut its operations at Gatwick.

EasyJet
The airline has announced plans to cut 4,500 employees, or 30% of its workforce.

Ryanair
The Irish airline intends to slash 3,000 roles and reduce staff pay by up to a fifth.

P&O Ferries
The shipping firm intends to cut more than a quarter of its workforce, a loss of 1,100 jobs. The company, which operates passenger ferries between Dover and Calais, and across the Irish Sea, as well as Hull to Rotterdam and Zeebrugge, will initially offer employees voluntary redundancy.

Centrica
The owner of British Gas is to slash 5,000 jobs, saying it was looking to cut costs by simplifying its business structure. The company is removing three layers of management, with more than half of the job losses falling on leadership roles, including half its 40-strong senior team.

Johnson Matthey
A major supplier of material for catalytic converters in cars, Johnson Matthey announced plans to make 2,500 redundancies worldwide, or 17% of its total workforce. The group said it was the result of the impact of the pandemic, and the uncertain outlook for the car industry.

Heathrow Airport
Voluntary redundancy has been offered to all of its 7,000 direct employees after coronavirus wiped out its passenger traffic.


Photograph: Bloomberg

This week the OECD said the UK economy would shrink by more than any other developed country as businesses struggled to recover from the pandemic. It predicted GDP would contract by 11.5% in 2020 or 14% if the virus returned and forced the government into a second lockdown.