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Economy

UK GDP shrinks by 2.6%

The services sector acted as the main drag on growth in November, with industries such as retail and accommodation accounting for nearly 80% of the fall

GDP declined by 2.6% in November 2020 as government restrictions reduced economic activity, the latest ONS figures reveal. 

Figures released by the statistics office show that November GDP was 8.5% below its pre-pandemic levels. The decline follows a period of economic growth for the UK, with last October’s report revealing that the country had grown a record 15.5% from July to September.

The services sector acted as the main drag on growth in November, with industries such as retail and accommodation accounting for nearly 80% of the fall. 

Suren Thiru head of the British Chambers of Commerce said: “The decline in output in November was largely driven by the drag on activity from the second lockdown, with consumer-focused services firms, who are most exposed to lockdown restrictions, enduring a particularly difficult month. 

“With any post-lockdown rally in output in December constrained by the tougher tiered restrictions, including the introduction of tier 4 measures, the UK economy is likely to have contracted in the final quarter of 2020.” 

He added: “A third lockdown means that a double-dip recession in the first quarter of this year may be inevitable, particularly if the current post-Brexit disruption persists through the quarter. A clear and comprehensive plan is urgently needed to support the economy throughout this year. 

“This should include closing the current gaps in government support and providing more significant grant funding to support cash strapped businesses. A fit-for-purpose Test, Trace and Isolate system remains critical to keeping the economy moving once the current lockdown ends.”

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