Jing Teow, senior economist at PwC, comments on today's GDP data:
"The data today shows that the toll of the coronavirus outbreak on the economy had already taken hold towards the end of March, with GDP falling by 5.8% in a single month. This coincided with the implementation of social distancing measures, which saw the closure of hotels, restaurants and pubs, shops selling non-essential items and other public spaces.
"The impact went beyond these immediate sectors as broader business closures followed, largely affecting sectors less able to adapt to working from home, such as manufacturing and construction. The rapid decline in March also contrasts sharply with the aftermath of the financial crisis, which was more of a more slowburn affair. This rounds off a rather weak picture for Q1, with growth declining by 2% on a quarterly basis, the largest fall since the 2009 financial crisis.
"The bigger adverse effects on GDP will come through in Q2, if recent business surveys by the Bank of England indicating a near halving of business sales and investment in Q2, are realised. However, extensive fiscal support through measures such as the Coronavirus Job Retention Scheme (JRS) could prevent a worse decline in output and consumer spending by enabling workers who may have otherwise lost their incomes to maintain some level of spending.
"The outlook for the economy remains highly uncertain. The government’s announcement that workers in the manufacturing and construction sector should return to work this week where safe, as well as opening the housing market, could mitigate some of the disruption to business activity in the current quarter. However, this will depend on the effectiveness of current lockdown measures in preventing a second wave of infections, which may necessitate the reimposition of these measures later on in the year."
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with over 250,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2020 PwC. All rights reserved
Manager, Corporate Affairs, PwC United Kingdom
Tel: +44 (0)7483 329628