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March 2021

The ongoing economic effects of the pandemic and the publication of the first data showing the impact of the end of the Brexit transition period on UK trade paint a grim picture of the UK economy.

But the UK’s vaccination programme and the first stages of the Government’s roadmap to ease lockdown restrictions offer glimpses of cautious optimism.

Headline Indicators summary

GDP fell by 1.7% in November 2020-January 2021 compared to the previous three-month period (August-October). This compares to growth of -0.7% in the Eurozone in Q4 2020.

Services output was down by 8.8% in the three months to January 2021 compared to the previous year. Manufacturing output fell by 3.4%.

CPI inflation was 0.4% in February 2021, down from 0.7% in January. Inflation in the Eurozone was 0.9% in February, unchanged from January.

The Bank of England’s Monetary Policy Committee (MPC) left interest rates unchanged at 0.1% on 18 March, the lowest they have ever been, following a cut from 0.25% on 19 March 2020.

Average wages excluding bonuses were 4.1% higher in the three months to December 2020 compared with the year before. CPI inflation for this period was 0.6%.

32.37 million people were in employment in November 2020-January 2021, down 611,000 from a year before. The employment rate was 75.0%, down from 76.5% the previous year.

1.70 million people were unemployed in November 2020-January 2021, an increase of 360,000 from the year before. The unemployment rate was 5.0%. The UK harmonised unemployment rate for Q4 2020 was 5.1%, above the rate of Germany (4.6%) but below that of the US (6.8%) and France (8.1%).

Productivity across the whole UK economy fell by 4.5% in Q4 2020 compared with the previous quarter. Compared with the previous year, it was down by 1.1%.

Government borrowing in April-February 2020/21 was £279 billion, £228 billion more than in the same period in 2019/20. At the end of February 2021, public sector net debt was equivalent to 97.5% of GDP, up from 83.4% at the end of February 2020.

The UK had a trade deficit of £14.5 billion in the three months to January 2021, compared with a £7.6 billion deficit in the previous three months. The current account deficit was £15.7 billion in Q3 2020 (2.9% of GDP), up from £11.9 billion in Q2 2020 (2.5% of GDP).

The value of sterling rose by 2.0% between January and February, following an increase of 1.3% between December and January. Compared with a year ago, it is 0.1% lower.

The volume of retail sales decreased by 6.3% in the three months to February 2021 compared with the previous three months, and decreased by 1.8% compared with the previous year.

House prices increased by 7.5% in the year to January 2021.

Household debt stood at 128.7% of disposable income in Q3 2020. It has been around this level since mid-2017.

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