UK GDP fell by 2.6% in November

The UK’s GDP fell by 2.6% in November as the government’s lockdown restrictions reduced economic activity, new data from the Office for National Statistics (ONS) has revealed.

November’s fall followed six consecutive monthly increases, including an upwardly revised 0.6% increase in October, as government restrictions came into place across all four nations of the UK.

The data revealed that GDP in November fell back to 8.5% below the levels seen in February 2020, compared with 6.1% below in October 2020. GDP also fell by 8.9% in the 12 months leading up to November, compared with an annual decline of 6.8% to October.

However, the ONS also reported that GDP grew by 4.1% in the three months to November. While this was down from 10.5% growth in the three months to October, the ONS suggested it reflects the easing of lockdown measures in earlier months and some recovery from the steep contraction recorded in April 2020.

Conister director, Douglas Grant, described the drop in output as “a cause for concern” for many UK businesses, and said it reflects the “dire situation” that they are now facing.

“We must now ensure that the financial security of those businesses that are sustainable can flourish in the future,” Grant added.

“Up until now, the Bounce Back Loan Scheme and Coronavirus Business Interruption Scheme have performed a fundamental role in keeping many SMEs alive and acted as an important triage system to identify and support qualifying businesses needing credit.

“However, we believe that we have now passed this phase and we must recognise that many businesses will not survive this pandemic, particularly those with an unsustainable debt burden. It is imperative for the future that we now focus on identifying and protecting our most resilient business sectors.”

Deepbridge Capital managing partner, Ian Warwick, added: “The dip in output for November will not come as a surprise as the majority of the country went into a second lockdown, and we are likely to continue to see fluctuation as the economy continues to grapple with varying restrictions, with the hospitality and leisure sectors the most likely to continue to be directly affected by these measures.

“Whilst economic contractions are unsustainable in the long-term, we do expect GDP to trend upwards as the vaccination programme is rolled out and restrictions are consequently eased.”

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