Covid-19: UK economy suffers record fall in April, hitting retail

The UK’s GDP fell by 20.4% in April, the biggest monthly decline since records began, figures from the Office for National Statistics (ONS) have shown. The analysis lays bare the devastating impact Covid-19 and resultant lockdown restrictions are having on all sectors of the economy, including retail.

The slump is far worse than what was recorded for March when the crisis started in the UK, where there was a decline of 5.8%. April was the first full month in which lockdown measures were in force, including the closure of all non-essential stores.

The ONS also revealed that GDP fell by 10.4% in the three months to April 2020, which is the biggest reduction in a single quarter ever recorded, including during the 2008 recession. Unsurprisingly, retail trade was found to have declined by 8.9% during this three-month period. And in April alone, the services sector saw a fall of 19.0%, with the largest driver to this fall being the wholesale, retail and motor trades sector.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, commented: “April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-Covid-19 fall. In April the economy was around 25% smaller than in February.

“Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall. Manufacturing and construction also saw significant falls, with manufacture of cars and housebuilding particularly badly affected. The UK’s trade with the rest of the world was also badly affected by the pandemic, with large falls in both the import and export of cars, fuels, works of art and clothing.”

Non-essential retail has been hit hard by the crisis, with consumers reducing discretionary spend in light of the economic uncertainty. Fashion and clothing in particular has suffered a huge slump in sales in this period. Many retailers have been reliant on eCommerce channels to generate revenue, and this avenue has grown by record levels, reaching 30.7% as a proportion of all retail sales in April according to figures last month from the ONS.

There is hope that a recovery will be begin as lockdown restrictions ease, including the reopening of non-essential retail shops from Monday.