London Daily

Focus on the big picture.
Thursday, Jul 09, 2026

UK economy shrinks but might avoid double-dip recession

UK economy shrinks but might avoid double-dip recession

Britain’s economy shrank in November as it went into a new lockdown, but the decline was smaller than expected as businesses adjusted to social distancing and schools remained open, making a double-dip recession less likely.


The 2.6% monthly decline in Friday’s official data was the first since April but less than half the average contraction forecast in a Reuters poll of economists. The scale was also far smaller than April’s 18.8% collapse during Britain’s first lockdown.

“Overall, the growing immunity to lockdowns suggests that the economy is not quite as sick as we thought,” said Paul Dales, chief UK economist at Capital Economics.

The world’s sixth-biggest economy shrank more than its peers in the first half of 2020 and is now 8.5% smaller than it was in February, before the start of the pandemic.

A third, stricter lockdown that began this month is likely to cause Britain’s economy to contract in the first quarter of 2021, when many businesses are facing post-Brexit barriers to trade with the European Union.

“It’s clear things will get harder before they get better and today’s figures highlight the scale of the challenge we face,” finance minister Rishi Sunak said.

But Britain’s roll-out of vaccines - which has been faster than elsewhere in Europe - was a reason to be hopeful, he added.

Several economists warned that Britain remained at risk of a renewed recession, with the economy likely to shrink in both the final quarter of 2020 and the first three months of 2021.

But others thought a contraction might be avoided in the fourth quarter because November’s restrictions were lifted in December.

BoE Governor Andrew Bailey said this week that it was too soon to say if further stimulus would be needed after the central bank ramped up its bond-buying programme to almost 900 billion pounds ($1.23 trillion) in November.

Friday’s data showed Britain’s economy in November was 8.9% smaller than a year earlier, compared with 6.8% smaller in October. In April, when many businesses closed temporarily, output was a record 25% below its year-ago level.

November’s downturn was led by services, where output fell 3.4% from October as pubs, restaurants, non-essential shops and many other consumer services had to shut. Manufacturing grew by 0.7% and construction by 1.9%.

Part of the scale of the damage to Britain’s economy in 2020 reflects a decision by the ONS to take account of disruption to routine medical care and schooling caused by COVID-19, an approach which not all countries’ statistics agencies have taken. The ONS said this was less of a drag on GDP in November.

Newsletter

Related Articles

0:00
0:00
Close
Tech Pulse: The Future of AI and Screen Culture
Global News Briefing: Escalating Geopolitical Tensions and Corporate Shakeups
Global News Brief: Escalating Conflicts, Public Health Crises, and World Cup Drama
Rare Early Copy of US Declaration of Independence Found in British Archive
Cornish Language Revival Gains Momentum Through Schools and Community Programs
UK Authorities Face Criticism Over Prisoner Early Release Safeguards
Clacton By-Election Set After Nigel Farage Resigns Seat to Trigger Contest
Government Agencies Review Long-Term Fiscal Risks from Aging Population and Low Productivity
UK Heatwaves Expose Pressure on Public Transport and Housing Infrastructure
UK Government Prepares Welfare Review Amid Debate Over Personal Independence Payment Reform
UK Government Expands Rapid Endometriosis Testing Across NHS Services
Vistry Group Issues Profit Warning as UK Housing Market Faces Continued Pressure
Virgin Media Receives Record Twenty-Eight Million Pound Fine Over Contract Cancellation Failures
Office for Budget Responsibility Warns UK Public Finances Face Long-Term Pressure
UK Watchdog Warns Regional Income Gap Has Barely Narrowed in Three Decades
IMF Raises United Kingdom Growth Forecast as Inflation and Energy Pressures Ease
UK Government Launches Regulatory Reform Bill to Speed Up Commercialization of Innovation
Prince Harry Loses Privacy Lawsuit Against Daily Mail Publisher After High Court Rejects Claims
Federal Financial Framework Shifts as Treasury Launches Universal Savings Program for Minors
Jet2 Reports Strong Summer Travel Demand as Bookings Rise Seven Percent
Prince Harry Loses High Court Privacy Case Against Daily Mail Publisher
British Universities Warn Against Potential European Union Tuition Fee Changes
Heal Fertility Clinic Investigated After Embryo Biopsy Sample Mix-Up
Resolution Foundation Warns Regional Income Divide Has Barely Improved Since 1997
British Markets Remain Cautious as Middle East Tensions Rise and Government Transition Nears
Andy Burnham Poised to Become United Kingdom Prime Minister in Expected Political Transition
Nigel Farage Resigns as Member of Parliament Ahead of By-Election Amid Funding Investigation
Trump Declares Iran Ceasefire Over After Renewed Attacks on United States Bases
French Court Allows Le Pen to Run for Presidency, but with an Electronic Tag: "I Will Appeal, and I Will Run"
$1.4 Trillion: The Lawsuit That Could Crush Meta
Europe's Growing Struggle with Extreme Heat and Air Conditioning
UK Daily Briefing: Legal Developments and Social Issues
Political Turmoil and Rising Costs
Anthropic Reengineers Agentic Architecture to Shift Autonomous Workplace Automation to the Cloud
Logic Flaw in Windows 11 Permission Architecture Silently Consumes Hundreds of Gigabytes of Local Storage
Apple Advances Late-Stage Operating Systems with Fourth Beta Deployments
Global Crisis Alert: Escalating Middle East Tensions and UK Political Upheaval
UK Parliament Pushes for Greater Domestic Control Over Critical Technologies
UK Parliament Warns Trade Fair and Exhibition Industry Is Losing Global Competitiveness
Police Launch Murder Investigation After Mother and Two Children Found Dead Near Bedford
British Chambers of Commerce Survey Shows Business Confidence Falls to Post-Pandemic Low
UK Parliament Report Warns Britain Risks Falling Behind in Artificial Intelligence Sovereignty
Office for Budget Responsibility Warns United Kingdom Faces Long-Term Fiscal Pressures
Nigel Farage Resigns as Member of Parliament Amid Financial Scrutiny and Triggers By-Election
Deep Purple Has Released Its Best Album in Decades
UK MPs Criticise Student Loan System as Potentially Mis-Sold to Millions of Borrowers
Policy Groups Propose Bank of England-Backed Solar Loan Scheme for Millions of Homes
UK Health Agency Issues Amber Heat Alerts Across Six Regions as Temperatures Rise
Royal Air Force F-35 Jets Conduct First High North Air Policing Missions From Aircraft Carrier
Major UK Companies Join Government Cybersecurity Pledge Amid Rising Digital Threats
×