UK economy slumps 2.9% in January on coronavirus curbs

Britain’s economy shrank by 2.9 percent in January after much of the country re-entered coronavirus lockdown, official data showed Friday.

The gross domestic product hit reverse after 1.2-percent growth in December, the Office for National Statistics said in a statement.

“Government restrictions reduced economic activity,” the ONS said. “Restrictions were in place to varying degrees across all four nations of the UK during January.” The economy was also 9.0 percent smaller than its pre-pandemic level in February 2020. The ONS said reduced activity in education and consumer-facing industries such as hospitality drove a 3.5-percent contraction in the services sector.

Much of the UK re-entered lockdown in early January to curb a variant Covid-19 strain that was deemed more transmissible. Restrictions were similar to initial curbs imposed in the second quarter of 2020 that sparked a recession. However, this month, the government eased Covid-19 restriction measures as some 23 million people in Britain have received at least a first vaccination. That brings down case numbers and eases pressure on hospitals.

Children returned to school in England on Monday for the first time since January under the initial stage of a phased re-opening. The government has said it will ease limits on social interaction outside on March 29, with the reopening of non-essential retail from April 12.

Prime Minister Boris Johnson has adopted a cautious approach in the hope of avoiding a renewed surge in cases that would force another lockdown. More than 123,000 people have died of Covid-19 across the UK, making it one of the world’s worst outbreaks.

The coronavirus crisis sparked a 10-percent collapse in the economy last year — its worst performance in more than three centuries. Finance Minister Rishi Sunak admitted earlier this month that Britain’s economic rebound from the “profound damage” caused by coronavirus will be much weaker than expected.