UK Economy Continued to Grow in Q4, Despite Tougher Covid Restrictions

UK GDP turned positive again in December, after the contraction in November

Skerdian Meta•Friday, February 12, 2021•2 min read

UK GDP reversed higher again, after the dip in November

The UK economy bounced back nicely in Q3 of last year, after the 19.8% dive in Q2, due to the coronavirus lockdowns. Today’s GDP report revised the Q3 numbers higher, as shown below, while Q4 also beat expectations. The monthly GDP report showed a considerable contraction in November, but today’s report showed that in December, the economy expanded again, which is positive.

UK Q4 Preliminary GDP

Q4 preliminary GDP +1.0% vs +0.5% q/q expected
Q3 GDP was 15.5%, revised to +16.0%
GDP YoY -7.8% vs -8.1% expected
Prior GDP YoY (Q3) -8.6%

Private consumption QoQ -0.2% vs -0.2% expected
Prior private consumption +19.5%
Government spending QoQ +6.4% vs +1.3% expected
Prior spending was +10.4%
Exports QoQ +0.1% vs +6.4% expected
Prior exports were -0.4%
Imports QoQ +8.9% vs +11.0% expected
Prior imports QoQ +11.7%

There was a slight delay in the release by the source. The headline beat estimates, as the UK economy performed admirably towards the end of last year, despite the fact that a one-month lockdown was observed during November.

That is some added good news for the Q1 outlook, considering the tighter restrictions now, although business conditions are looking more subdued relative to Q4 last year. Post-Brexit concerns for businesses will only add to the uncertain outlook this year, but at least the vaccination rollout is progressing smoothly so far. As a whole for 2020, the UK economy shrank by 9.9%, which was the biggest contraction since 1970.

Prior -2.6%; revised to -2.3%
Index of services +1.7% vs +1.0% m/m expected
Prior -3.4%

Another slight delay in the release by the source. After a dip in November activity, due to lockdown measures, the UK economy bounced back modestly in December. The data here is merely an accompaniment to the Q4 GDP report released at the same time.

Factory activity data was also released at the same time; see below:

UK December monthly GDP

December monthly GDP +1.2% vs +1.0% m/m expected
Manufacturing production +0.3% vs +0.7% m/m expected
Prior +0.7%
Manufacturing production -2.5% vs -3.2% y/y expected
Prior -3.8%

Industrial production +0.2% vs +0.5% m/m expected
Prior -0.1%
Industrial production -3.3% vs -3.7% y/y expected
Prior -4.7%

Construction output -2.9% vs +0.5% m/m expected
Prior +1.9%
Construction output -3.7% vs -0.2% y/y expected
Prior -1.4%

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.