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- The UK economy declined more than initially expected in the first three months of the year, the Office for National Statistics showed Tuesday.
- It was the largest drop in the country since 1979, when the country was fighting industrial unrest and high unemployment.
- Gross domestic product decreased by 2.2% in the first quarter, down 0.2 percentage points from the previous estimate of a 2% drop.
- Households cut their spending while other sectors such as services, manufacturing and construction have had a negative impact on the general economy, leading to the GDP crisis.
- Earlier this year, the Bank of England predicted that the UK’s GDP could drop by more than 30% in the first half of 2020, as pandemic strikes produced strong growth.
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The British economy has declined to a greater extent since 1979 in the first three months of 2020, as household consumption has drastically decreased during the pandemic, according to data released Tuesday by the country’s national statistical authority.
The country’s gross domestic product for the first quarter decreased by 2.2%, down 0.2 percentage points from the Office of National Statistics’ previous estimate of a 2% drop in production.
Household consumption fell by 2.9% in the first quarter. Likewise, services, manufacturing and construction sectors all contributed negatively to GDP, said the ONS.
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The last time the UK was hit so badly was in the third quarter of 1979, under the first few months of Margaret Thatcher’s first government, when the economy declined by the same level by 2.2% driven by industrial strikes , high inflation and serious unemployment.
“The sharp drop in consumer spending in late March led to a significant increase in household savings,” said Jonathan Athow, deputy national statistician of economic statistics at the ONS in a tweet.
The household savings ratio – which records net savings as a percentage of disposable income – increased to 8.6% in the first three months of the year, compared to 6.6% in the fourth quarter of 2019, ONS data show .
The Bank of England predicted that the economy could decline by 30% in the first half of the year, depending on the duration of the blocking restrictions.
As many parts of the country prepare to reopen in stages, Prime Minister Boris Johnson is already preparing to reset a blockade in the city of Leicester, where there is a renaissance of new coronavirus cases.
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