UK economy suffers biggest slump on record due to COVID-19

The UK economy suffered its biggest slump on record in 2020, with GDP falling by 9.9 per cent over the course of the year.

That means the COVID-19 pandemic has effectively wiped out all growth in the United Kingdom over the past seven years, returning the UK economy to the size it was in 2013.

There were some signs of improvement in the final months of 2020, with GDP estimated to have increased by one per cent in the fourth quarter, following record growth in the third.

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But there were big swings in output over the course of the October-December period, largely tracking the level of restrictions imposed to contain the coronavirus.

The scale of the annual drop in GDP last year means the UK has suffered more than many other major economies.

Germany, for example, held up better in the pandemic than it did during the global financial crisis.

Provisional estimates suggest Europe's biggest economy contracted by five per cent last year.

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The US fared even better by comparison, with GDP decreasing by 3.5 per cent from the prior year.

A new national lockdown in the United Kingdom, imposed on January 5, is expected to hit the economy hard in the first quarter of 2021.

Disruption to EU-UK trade following the end of the Brexit transition period on December 31 is also expected to weigh on activity.