The Courier & Advertiser (Fife Edition)

Industry plunges at fastest level on record as UK heads for a recession

Warning of recession on a scale ‘not seen in modern history’

- HENRY SAKER-CLARK business@thecourier.co.uk

UK industrial output saw the largest slump on record as measures to halt the spread of coronaviru­s dealt the economy a severe blow, according to new figures.

Economists said the new data revealed that “a recession of a scale we have not seen in modern history” is increasing­ly likely.

The flash IHS Market/CIPS composite purchasing managers index (PMI), a preliminar­y report before final figures are released next week, gave a reading of 37.1 in March. It fell from 53.0 in February.

The survey, compiled between March 12 and March 20, reported the most dramatic decline since the series of figures was first started in 1998.

Chris Williamson, chief business economist at IHS Markit, said: “The surveys highlight how the Covid-19 outbreak has already dealt the UK economy an initial blow even greater than that seen at the height of the global financial crisis.

“With additional measures to contain the spread of the virus set to further paralyse large parts of the economy in coming months, such as business closures and potential lockdowns, a recession of a scale we have not seen in modern history is looking increasing­ly likely.”

The slump was heavily driven by the services sector, which saw output plummet as people were told to shun pubs, restaurant­s and leisure venues due to the pandemic.

The survey’s flash services index fell to 35.7 in March, from 53.2 in February.

It was significan­tly worse than the previous lowest reading of 40.1 in November 2008, after footfall completely subsided.

Measures to stem the spread of coronaviru­s particular­ly impacted hotels, restaurant­s and other leisure activities such as sports centres, gyms and hair salons, the survey said. Meanwhile, manufactur­ing output also dipped lower, falling to 44.3 in March, from 52.2 in February, in the largest decline since 2012.

The survey said that only producers in the food and drink, and chemicals and plastics sectors reported growth of output in March, as other sectors were hit by internatio­nal factory shutdowns.

Duncan Brock, group director at CIPS, said: “Just as the economy began to strengthen at the beginning of the year, the shock of this deepening global health crisis has flung businesses into the abyss, with the worst overall downturn in manufactur­ing and services for more than two decades.

“The services sector received the largest blow as citizens reduced their social activity and leisure activities were abandoned.”

The Bank of England slashed interest rates to a new historic low of 0.1% and unleashed another £200 billion to boost the economy last week in its second major emergency move to help combat the impact of the virus on the UK economy.

Rhys Herbert, senior economist at Lloyds Bank Commercial Banking, said: “Encouragin­gly, government­s like ours are taking proactive steps to curb the economic fallout.”

 ??  ?? Gleneagles Hotel is one of thousands of businesses that have closed during the coronaviru­s outbreak.
Gleneagles Hotel is one of thousands of businesses that have closed during the coronaviru­s outbreak.

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