“Today’s figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world,” the U.K.’s top treasury official, Chancellor Rishi Sunak, said in a statement. “While there are some positive signs of the economy’s resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses.”
Sunak said he would announce new plans to protect jobs and bolster the economy when he delivers his annual budget statement to the House of Commons on March 3.
COVID-19 has hit Britain’s economy harder than most other industrialized democracies. French GDP shrank 8.3% last year, Germany 5% and the U.S. 3.5%.
The GDP figures show the breadth of the pandemic’s economic impact in Britain.
The service sector, which accounts for about 80% of the U.K. economy, shrank 8.9% last year, with output from accommodation, food and beverage businesses down more than 55% from February levels. Manufacturing fell 8.6% and construction 12.5%.
In hopes of relaxing the restrictions that have devastated the economy, the U.K. has moved to rapidly vaccinate its most vulnerable residents. More than 13.5 million people, or about 20% of the population, had received at least one dose of COVID-19 vaccine by Wednesday.
Andy Haldane, chief economist for the Bank of England, said the vaccination drive is helping Britain turn a corner in its battle against the virus. Lifting COVID-19 restrictions is likely to unleash a wave of spending by consumers and businesses that will trigger a rapid recovery later this year, he said.
“A decisive corner is about to be turned for the economy, too, with enormous amounts of pent-up financial energy waiting to be released, like a coiled spring,” Haldane wrote in the Daily Mail.
But that optimism comes against the backdrop of Europe’s deadliest coronavirus outbreak, with more than 115,000 deaths recorded so far.
“These figures confirm that not only has the U.K. had the worst death toll in Europe, we’re experiencing the worst economic crisis of any major economy,” said Anneliese Dodds, the opposition Labour Party’s spokesperson on economic issues. “Businesses can’t wait any longer. The Chancellor needs to come forward now with a plan to secure the economy in the months ahead, with support going hand-in-hand with health restrictions.”