London Daily

Focus on the big picture.
Monday, Mar 16, 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
King Charles and Queen Camilla Share Personal Tributes to Their Mothers on UK Mother’s Day
Prince William Honors Princess Diana with Mother’s Day Tribute
UK Economy Stalls in January as Households Cut Back on Eating Out
AI-Generated Singer Becomes Viral Voice for Iranians With New Anthem
London Private Club Founder Plans Exclusive Palm Beach Venue Near Trump’s Mar-a-Lago
Ed Davey Urges Britain to Build Fully Independent Nuclear Missile Capability
What the UK Covid Inquiry Is and How It Investigates Britain’s Pandemic Response
What the UK Covid Inquiry Is and How It Investigates Britain’s Pandemic Response
US Treasury Links British Polo Patrons to Alleged Venezuelan Oil Proceeds Laundering Scheme
Hundreds Gather in London Despite Ban on Annual Pro-Palestinian March
Two Dead and Multiple Students Seriously Ill After Invasive Meningitis Outbreak at UK University
UK Considers Deploying Ships and Mine-Hunting Drones to Reopen Strait of Hormuz
Starmer and Trump Discuss Urgent Need to Reopen Strait of Hormuz Amid Escalating Iran Conflict
Prince Harry and Meghan Markle’s Planned Australia Visit Draws Mixed Reaction From Local Communities
Trump Calls on France and UK to Help Safeguard Strait of Hormuz Shipping Route
Boris Johnson Labels Bitcoin a ‘Ponzi Scheme’, Sparking Debate in Crypto World
UK Considers Targeted Aid for Vulnerable Households as Energy Costs Rise
Stellantis Urges Immediate Review of UK Electric Vehicle Sales Targets
Home Office Reverses Course to Allow Some Dual Nationals to Enter UK Using EU Passports
Reform UK Proposes Replacing Top Civil Servants With Officials Aligned to Government Agenda
Netflix Adds Critically Acclaimed ‘Best Film of 2025’ With Perfect Rotten Tomatoes Score
‘The Sums Don’t Add Up’: UK Farmers Hit by Soaring Costs as Iran War Disrupts Global Supplies
Confidential UK Biobank Health Records Found Online After Researchers Accidentally Expose Data
Trump Urges Britain and Allies to Deploy Warships to Safeguard Strait of Hormuz
Trump Urges Britain and Allies to Deploy Warships to Safeguard Strait of Hormuz
Middle East War Highlights Strategic Importance of Strong UK–Ireland Cooperation
Weak Growth Signals UK Economy Was Faltering Even Before Middle East Energy Shock
Marks & Spencer Tops UK Fashion Retail Rankings as Most Considered Brand
United States Launches Trade Investigation Into Allies Over Forced Labour Practices
United States Launches Trade Investigation Into Allies Over Forced Labour Practices
Russia Accuses Britain Over Storm Shadow Strike as London Reaffirms Ukraine’s Right to Self-Defence
Russia Accuses Britain Over Storm Shadow Strike as London Reaffirms Ukraine’s Right to Self-Defence
Royal Navy to Acquire Twenty Uncrewed Surface Vessels for Autonomous Warfare Testing
Russia Summons British and French Envoys After Ukrainian Storm Shadow Strike on Strategic Facility
Starmer Confirms Britain Will Maintain Sanctions on Russia Despite U.S. Policy Shift
UK Moves to Refine AI Definition in Investment Security Reform
UK Economy Stalls in January as Growth Unexpectedly Falls to Zero
Asian Energy Security Tested as Strait of Hormuz Disruption Threatens Oil Supplies
Iran Sets Three Conditions for Ending Regional War as Diplomatic Efforts Intensify
Tesla Secures Approval to Supply Electricity Directly to Homes Across Britain
Prince William Delivers Tribute to Australia’s Naval Alliance Amid Renewed Royal Spotlight on the Country
UK Foreign Secretary Travels to Saudi Arabia to Reinforce Support for Regional Allies
Putin’s ‘Hidden Hand’ May Be Assisting Iran in Conflict With Trump, UK Defence Secretary Warns
UK Sets April Deadline for Tech Platforms to Strengthen Online Protections for Children
Elon Musk Moves Into Britain’s Energy Market as Tesla Wins Licence to Supply Power
UK Watchdog Warns Fuel Retailers Against Profiteering Amid Iran War Price Surge
Report Claims Iran Used UK Charity Network to Expand Influence
United States and United Kingdom Establish Joint Standards for Counter-Drone Technology
Iran May Be Laying Naval Mines in Strait of Hormuz, UK Warns Amid Escalating Gulf Tensions
US Deploys Bunker-Buster Bombs to UK Airbase as Iran Conflict Intensifies
×