GDP monthly estimate, UK: December 2020

Gross domestic product (GDP) measures the value of goods and services produced in the UK. It estimates the size of and growth in the economy.

This is the latest release. View previous releases

This is an accredited National Statistic. Click for information about types of official statistics.

Contact:
Email Niamh McAuley

Release date:
12 February 2021

Next release:
12 March 2021

1. UK GDP grew by 1.2% in December 2020

!

GDP estimates for December 2020 are subject to more uncertainty than usual as a result of the challenges we faced in the current conditions.

Real gross domestic product (GDP) increased by 1.2% in December 2020, following a revised 2.3% decline in November, when there were more extensive restrictions to activity. During December, a period of eased restrictions early in the month was followed by tighter restrictions to activity across all four nations of the UK later in the month.

December GDP is 6.3% below the levels seen in February 2020; this compares with 7.4% below pre-pandemic levels in November 2020.

More about economy, business and jobs

The services sector acted as the main contribution to growth in December, increasing by 1.7% as a number of consuming facing industries reopened following the easing of restrictions in December, as well as strong growth in health (with the strongest contributions coming from the coronavirus testing and tracing schemes). The services sector is now 6.9% below the level of February 2020.

The production sector grew marginally by 0.2% in December 2020, and is now 3.6% below its February 2020 level. Elsewhere the construction sector acted as a drag on growth in December, falling by 2.9% following seven consecutive monthly increases. The construction sector is now 3.5% below the level of February 2020.

The services sector saw growth in eleven out of fourteen sub-sectors between November and December 2020. The largest contributors to this increase were in industries which benefited from the period in early December where restrictions were eased in some parts for the UK. For example, accommodation and food service activities, followed by wholesale and retail trade and other service activities. Health also contributed positively in December, driven by an increase in activity, mainly due to the coronavirus testing and tracing schemes across the UK.

This release features revisions to the monthly data back to January 2020, consistent with the GDP first quarterly estimate also published today. More detail can be found in Revisions in Section 7.

Looking ahead, results from Wave 23 of the Business Impact of Coronavirus (COVID-19) Survey (BICS), which covered the dates 11 to 24 January 2021, found that over 1 in 10 (12%) currently trading UK businesses said that turnover had decreased by more than 50% compared with what is normally expected for this time in January. The percentage of businesses currently trading fell to 71% in January (Wave 22), after falling from 84% of businesses currently trading in mid-December 2020 (Wave 20) before the current lockdown restrictions began.

The monthly growth rate for GDP is volatile. It should therefore be used with caution and alongside other measures, such as the three-month growth rate, when looking for an indicator of the medium-term trend of the economy. However, it is useful in highlighting one-off changes that can be masked by three-month growth rates.

Back to table of contents

2. The output measure of GDP grew by 1.0% in Quarter 4 2020

Gross domestic product (GDP) grew by 1.0% in Quarter 4 (Oct to Dec) 2020, following revised 16.1% growth in Quarter 3. Despite two consecutive quarters of growth, the level of GDP in the UK is still 6.6% below where it was in Quarter 4 2019, prior to the pandemic.

Quarterly growth captures the average level of output in October to December relative to the average in July to September. For more details on quarterly GDP, please see GDP first quarterly estimate, UK: October to December 2020 published today (12 February 2021).

The services sector grew by 0.6%, production by 1.8% and construction by 4.6% in Quarter 4 (Oct to Dec 2020). Of these sectors, the services sector saw the weakest Quarter 4 growth reflecting the comparatively higher restrictions on activity in place in November across many parts of the UK, which had a bigger impact on services.

Back to table of contents

3. Annual GDP fell by 9.9% in 2020, the largest yearly fall on record

Annual average GDP fell by 9.9% in 2020, with output falling by 9.1%, the largest annual decline on record. Within output, all four sub-sectors saw annual declines:

  • services fell by 8.9%
  • production fell by 8.6%
  • construction fell by 12.5%
  • agriculture fell by 9.4%
Back to table of contents

4. Output in the services sector grew by 1.7% in December 2020

Figure 5 shows the performance of total services output, a composite industrial indicator based on output in “consumer-facing” services, and output in all other industries in the services sector. In November 2020, consumer-facing services weakened as restrictions were reintroduced in some parts of the UK. In December 2020, consumer facing services saw a partial recovery as restrictions were eased in early December, boosting consumer demand for pubs and restaurants, personal services and motor vehicles.

Increased activity saw health also make a large contribution to growth in December 2020, increasing by 2.4%, mainly through the coronavirus testing and tracing schemes across the UK.

Looking at quarterly growth, services output slowed to 0.6% in Quarter 4 (Oct to Dec) 2020, following a record 14.7% increase in Quarter 3 (July to Sept). This was driven by increases in 10 out of 14 services sub-sectors. Most notably, health contributed 0.77 percentage points as a result of increased volume of activity through the coronavirus testing and tracing schemes across the UK (more on the measurement of this activity can be found in GDP first quarterly estimate, UK: October to December 2020). Accommodation and food services acted as a drag on growth in Quarter 4 (Oct to Dec) falling by 32.8%, due to the reintroduction of restrictions in parts of the UK, in particular in November 2020.

Back to table of contents

5. Output in the production sector grew by 0.2% in December 2020

Production grew marginally by 0.2% in December 2020 as three out of the four sub-sectors increased. The manufacturing sub-sector grew by 0.3%, the eighth consecutive month of growth. The largest contribution came from the manufacture of motor vehicles industry, which grew 0.7% in December 2020. This is a result of growth from large businesses to meet increased demand, and this industry is now 4.4% above its February 2020 level.

Electricity, gas, steam and air conditioning supply increased by 0.7%, while water supply increased 0.1% in December 2020. Elsewhere in production, mining and quarrying fell by 1.0% due to reduced demand in the global market. Oil and gas extraction has seen large declines since June 2020, mainly due to tightened restrictions impacting on demand.

Output in the production sector grew by 1.8% in Quarter 4 (Oct to Dec) 2020. This was mainly driven by an increase of 3.3% in manufacturing. Most notably, the manufacture of transport equipment grew by 11.5%, however, it remained 11.1% below its pre-pandemic level. The manufacture of air and spacecraft, meanwhile, in this subsector has struggled to regain output and remains 33.0% below the pre-pandemic level.

Water supply, sewerage and waste management and remediation activities grew by 1.0% as a result of a general increase in commercial, industrial and construction waste activity.

Both mining and quarrying and electricity, gas, steam and air conditioning supply acted as drags on growth in Quarter 4 (Oct to Dec 2020) falling by 5.9% and 1.9% respectively.

Back to table of contents

6. The construction sector fell by 2.9% in December 2020

Output in construction fell by 2.9% in December 2020, following seven consecutive months of growth. Despite the industry remaining broadly open, all types of work saw a fall in December 2020, as businesses continued to adhere to social distancing measures along with site shutdowns as part of the Christmas period.

The December decline was driven by falls in both private new housing and private commercial of 3.0% and 6.0% respectively.

The construction sector grew by 4.6% in Quarter 4 (Oct to Dec) 2020. All types of work, apart from private commercial, contributed positively to growth with the largest contribution coming from private new housing, which grew by 6.7%.

Back to table of contents

7. Things you need to know about this release

International comparisons

Differences in the methods for estimating the output of health and education services across different countries mean GDP may be less internationally comparable during the COVID-19 pandemic and recovery than usual, so should be made with increased caution.

Revisions

This release gives data for December 2020 for the first time and is open to revision from January 2020 to November 2020, consistent with GDP first quarterly estimate published today. Table 2 shows the revisions to monthly GDP and sub-sectors for 2020.

Further details about the main changes affecting this release are provided in the latest GDP first quarterly estimate release.

Coronavirus (COVID-19)

This release captures the direct effects of the coronavirus (COVID-19) pandemic and the government measures taken to reduce transmission of the virus. We have faced an increased number of challenges in producing monthly and quarterly estimates of UK gross domestic product (GDP). More detailed information on the challenges and the steps taken to mitigate those can be found in Coronavirus and the effects on UK GDP.

As a result of these challenges, GDP estimates for December 2020 are subject to more uncertainty than usual.

Early in the pandemic we face some challenges in timely responses to the monthly business survey as businesses adapted to new conditions. In recent months response rates have improved and are shown for the latest months in Table 3.

Notes

  1. Table shows MBS turnover response rates.

  2. Response rate for all months, both questionnaire and turnover, can be found in Index of Production, Index of Services, and Construction.

End of EU Exit Transition period

As the UK enters into a new Trade and Cooperation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision makers have the data they need to be informed.

Additionally, the Withdrawal Agreement outlines a need for UK gross national income (a fundamental component of the national accounts, which includes GDP) statistics to remain in line with those of other EU countries until EU budget contributions are finalised for the years in which we were a member, and making budget contributions during the transition period. To ensure this comparability during this period, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards until at least 2024.

As the shape of the UK’s future statistical relationship with the EU becomes clearer over the coming period, we are making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK’s well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available in early this year.

Communicating gross domestic product

Recent analysis explains our latest position on how we are looking to communicate GDP, including how we will continue to acknowledge that “technical” recessions are comprised of at least two consecutive quarters of contracting GDP.

While it is still true that these early estimates are prone to revision, we prefer to focus on the magnitude of the contraction that has taken place following the COVID-19 pandemic. It is clear that the contraction in GDP in Quarter 2 (Apr to June) 2020 was in the largest recession on record. Our latest estimates show that the UK economy is now 6.3% smaller than it was in February, the effects of which have been most pronounced in those industries that are most exposed to public health restrictions and the effects of social distancing.

Back to table of contents

8. Quality and methodology

Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Gross domestic product (GDP) QMI.

Back to table of contents

Contact details for this Statistical bulletin

Niamh McAuley
gdp@ons.gov.uk
Telephone: +44 (0)1633 455284