Publication - Research and analysis

State of the economy: April 2020

Published: 21 Apr 2020
From:
Gary Gillespie
Directorate:
Chief Economist Directorate
Part of:
Coronavirus in Scotland, Economy
ISBN:
9781839607035

Report summarising recent developments in the global, UK and Scottish economies with an analysis of the performance of, and outlook for, the Scottish economy.

27 page PDF

2.4 MB

27 page PDF

2.4 MB

Contents
State of the economy: April 2020
United Kingdom Summary

27 page PDF

2.4 MB

United Kingdom Summary

  • The UK economy grew marginally in the 3-months to February (having not grown in Q4 2019), prior to the COVID-19 outbreak fully impacting. Industry data pointed to initial negative impacts on sectors exposed to international tourism and supply chains as COVID-19 started to across continents.

Business activity fell to its lowest level since 1998 in March.

  • UK PMI business survey data for March showed a significant contraction in UK business activity as firms faced a collapse in demand and the introduction of social distancing measures.
  • The contraction was sharpest in the services sectors, likely reflecting the most immediate falls in demand for tourism, leisure and hospitality.
  • The manufacturing sector was also impacted with output falling at its fastest rate since 2012 and firms reported a significant deterioration in their supply chains.
  • Construction output fell at its fastest rate since 2009 with the largest falls in civil engineering and commercial building.

Job security and household finances impacted in March.

  • UK PMI business surveys for March reported the fastest falls in staffing levels across the services, manufacturing and construction sectors since 2009-10.
  • UK consumer confidence fell to its lowest level since 1974 in March, with respondents signalling a significant deterioration in confidence about their financial situation (GfK Survey).
  • Universal Credit (UC) claims (out of work/low income benefit) rose sharply in March. Over the two week period to 7 April, new claims for UC increased by around 767,000 in the UK.

GDP expected to contract sharply in 2020.

  • OBR analysis suggests a fall in UK output of 35% is possible in Q2 2020, if 'lockdown' measures remain in place until June, with a 13% contraction over 2020 as a whole.
  • The IMF projects UK GDP to contract by 6.5% in 2020 and to partially recover to 4% growth in 2021.
UK Purchasing Managers’ Index
UK Purchasing Managers’ Index
UK Manufacturing: Supply Chains
UK Manufacturing: Supply Chains
UK Purchasing Managers’ Index: Employment
UK Purchasing Managers’ Index: Employment
UK New Universal Credit Claims, Daily
UK New Universal Credit Claims, Daily

Contact

Email: OCEABusiness@gov.scot