UK economy posts sharpest contraction on record

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UK economy posts sharpest contraction on record

Britain's GDP fell by 5.8% in March, with 1Q GDP down by more than 2%, according to government figures published this morning by the Office for National Statistics (ONS).

The covid-19 lockdown came into effect late in March. Last week the Bank of England forecast a 25% decline YoY for 2Q2020, and expects a huge 14% decline overall through the course of this year. The BoE's outlook would mean the UK is set to experience its worst recession since 1706.

March saw the biggest monthly decline in GDP since 1997, according to the UK's Office for National Statistics (ONS).

The size of the drop in March when the pandemic took hold is shocking and begins to reveal what the true economic impact of coronavirus will be."

Richard Pearson, a director at EQi, called the 5.8% fall in March "shocking." He said:  "The fall in GDP is no surprise, but the size of the drop in March when the pandemic took hold is shocking and begins to reveal what the true economic impact of coronavirus will be."

However, Pearson said the longer-term outlook from investors' perspectives was cautiously optimistic: "Despite the market fall in the past few weeks, feedback from EQi retail investors shows that most are fairly confident in the medium term. Investing is a long-term path, and those seasoned savers who have weathered past financial storms will know that they can get back on the right road in the long run to meet their end goal. 

"Now isn't the time to start changing tactics - it's the time to keep a level head and hold out for eventual recovery."

Last week the BoE voted to hold interest rates at their current record low of 0.1%.

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Christopher Copper-Ind

Christopher Copper-Ind is editor-in-chief of International Investment. Before this, he was editorial director of The Business Year, from 2014 to 2017.