UK economy in April sees record decline

The UK’s economy shrank by an astonishing 20.4 per cent in April, the steepest monthly drop since records began.

The Office for National Statistics (ONS), which published the latest data, called the fall in national income or GDP ‘historic’ and said it was three times greater than the decline seen throughout the financial crisis in 2008 and 2009.

“April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost 10 times larger than the steepest pre-Covid-19 fall,” said ONS deputy national statistician for economic statistics Jonathan Athow.

“Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall.”

The ONS found that the UK services sector, which dominates the economy, shrank by nearly a fifth in April amid the lockdown at a time when non-essential shops are shut. Air transport shrank by 92.8 per cent after the vast majority of flights were grounded. Meanwhile, the accommodation and food services sector shrank by nearly 90 per cent as hotels, pubs, restaurants and bars shut down.

Manufacturing output feel by a quarter, while there was also a 20.3 per cent decline in production – which includes factory output and energy and mining. The ONS said this was the biggest fall in history and eclipses the production fall during the miners’ strikes in the 1970s by double.

The latest horrific figures for April – which was the first full month that the UK spent in lockdown – come in the wake of a separate report from the Organisation for Economic Cooperation and Development (OECD) which predicted the UK to be the hardest hit country out of all developed nations by the end of the year.

More than one in four workers is now currently on furlough, where the government covers 80 per cent people’s wages – totaling nearly 9m people. The number of people claiming Universal Credit spiked drastically in April by more than 800,000 to 2.1m total.

Job losses

Job losses continue to mount, with the last week alone seeing more than 10,000 job loss announcements. Among the biggest of these was British Gas-owned Centrica, which announced 5,000 job losses earlier this week, mostly in managerial roles.

Unite criticised the energy giant for failing to clarify how the job losses will affect frontline workers.

Unite regional officer Mark Pettifer called the job losses “another blow to the already fragile British economy and have created worrying uncertainty amongst the entire workforce.

“Following today’s conference call, there was no clarity as to how these job losses at the various management levels would affect those delivering frontline services, such as our members who provide an essential service to British gas customers’ homes across the country,” he said.

“It was all a bit vague and unsatisfactory – and we will be pressing the company in the days and weeks ahead ‘to put flesh on the bones’ as to how these job losses will affect – or not , as the case may be –  those in customer-facing roles.

“We are demanding much greater clarity and reassurance for our members who are providing much needed services to the nation’s households.”

Other job loss announcements in the last week included chemicals firm Johnson Matthey which said it intends to axe 2,500 jobs; the Restaurant Group, which expects 3,000 jobs to go after saying it will not re-open some of its outlets after the lockdown; and Bombardier in Belfast, which says it plans to cull 600 jobs.

Heathrow Airport announced on Thursday (June 11) that it is commencing a voluntary redundancy programme offered to all 7,000 of its directly employed workers.

Unite strongly rejected the prospect of any forced redundancy and so successfully negotiated a voluntary severance scheme for Heathrow workers.

“The union recognises that there are workers currently employed at the airport who are prepared to leave in order to pursue fresh opportunities elsewhere,” said Unite regional co-ordinating officer Wayne King.

 “Unite will assist our members throughout this process and will ensure that no worker is pressurised or coerced to apply for severance,” he noted.

 “We have been clear with the company that Unite will not allow any needless job losses or accept any attacks on our members’ pay, terms and conditions,” King added.

 “Although Unite realises that current passenger levels are at unprecedented low number, we also know the drop in passenger volume is temporary, they will return to previous levels at some point in the future.

 “Under no circumstances will Unite let Heathrow Airport use the current Covid-19 pandemic as a smokescreen to cut pay for profit.”

Commenting on the latest raft of job losses, Unite assistant general secretary Steve Turner said, “It’s another grim week for working people and this is while the jobs retention scheme is still in place, in full.  We dread to think what will happen when furlough tapers off so we cannot understand the delay on the support for sectors supporting the jobs of millions of people like auto manufacturing and aerospace.

 “Across the Channel, the French and German governments are pressing on with investment and support for economically key sectors, securing jobs and skills, boosting confidence and making them attractive places to base a business,” he added. “We urgently need the UK government to provide the same level of support for and faith in UK workers or the jobs loss tsunami we fear will sweep through our towns and communities this summer.”

Hajera Blagg