Stronger than expected December growth sees the UK avoid a double dip, but suffer the biggest output fall in over 300 years

Responding to the latest ONS GDP figures today (Friday), which show that the economy grew by 1.2 per cent in December, and by 1 per cent in the final three months of 2020, but fell by 9.9 per cent over 2020 as a whole (making it the biggest annual economic contraction since 1709), James Smith, Research Director at the Resolution Foundation, said:

“The economy continued to grow at the end of last year, despite public health restrictions, as firms continued to adapt to restrictions by shifting their working patterns and even business models.

“Positive growth in the last quarter of 2020 means the country is likely to avoid a double dip recession, despite the economy being set to contract in early 2021.

“While the big picture of 2020 is that it saw the fastest fall in output for over 300 years, the fast pace of the vaccine roll-out means that we should expect most – but by no means all – parts of the economy to start growing again by the middle of 2021.

“The ability to sustainably lift lockdown restrictions without the virus caseload increasing will determine when a true recovery can begin, but the strength of that recovery will also be shaped by decisions taken at the upcoming Budget. That should include an extension, and gradual phasing out, of the furlough scheme, along with additional grants targeted at sectors most affected by continuing restrictions.”