Britain’s economy is on track for its fastest and most severe contraction ever recorded, experts have warned, after a new survey pointed to a record drop in activity.
Services businesses, which make up as much as four-fifths of the economy, covering everything from hairdressing to bookkeeping, reported a record plunge in activity in April amidst the total lockdown order in the country.
The IHS Markit Purchasing Managers Index (PMI) dropped to 13.4, with anything below 50 indicating that the sector is shrinking. That was down from 34.5 in March, which had already been a record low. In the depths of the 2008 financial crisis, the survey fell to 40.1.
Around 79 per cent of services businesses reported activity fell in April. Much of the decline was expected because restaurants, bars, non-essential retailers and other services businesses were forced to shut down on 23 March to slow the spread of Covid-19.
But the survey demonstrates just how drastically activity has been curtailed. Government measures such as grants to hospitality businesses and cheap loans to small firms have been designed to ensure that, as much as possible, the contraction is a temporary result of the coronavirus lockdown and does not develop into a longer-term depression.
The news came as the UK death toll from coronavirus surpassed that of every other European nation. Only the US – with a population five times the size – has seen more Covid-19 deaths.
Comments are closed.