Figures released show that January’s GDP was 9.0% below the levels seen in February 2020, and 4.0% below October 2020 – the “initial recovery peak” for the economy last year.
The service sector also contracted by 3.5% at the start of the new year, as consumer-facing roles such as retail and hospitality were forced to operate at limited trading conditions.
This dip was 10.9% below its February 2020 level, showcasing the impact Covid-19 has had on such industries.
The production sector fell by 1.5% during the month, dropping 5.0% below its pre-pandemic level.
However, construction proved to be one of the only sectors to witness a positive growth, rising 0.9% in January after a fall of 2.9% in December 2020.
Despite the overall decline, Suren Thiru, head of economics at the British Chamber of Commerce (BCC) said that latest data “confirms a better than expected start to the year for the UK economy”. Stating that factors such as the third lockdown and post-Brexit border disruption triggered only a “relatively modest decline in economic activity in January”.
He said: “The vaccine rollout and budget stimulus will boost output as restrictions ease. However, the lingering economic effects of covid, including elevated consumer and business debt levels, may severely limit the pace of any recovery.
“Despite a number of welcome announcements in the budget, there are still many businesses and individuals who have, through no fault of their own, been excluded from government support. Many will require help if they are to navigate a difficult few months ahead before the economy is able to fully reopen.”