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March 31, 2021UK GDP Q4 2020 (SECOND ESTIMATE) The Office for National Statistics (ONS)' second estimate of UK Gross Domestic Product (seasonally adjusted annualized rate) for Q4 2020 reports an increase of 5.2% following an annualized 87.1% increase in Q3. This second quarterly increase follows on record declines in the first and second quarter of 2020 due to impacts of the COVID-19 pandemic. Compared to the previous quarter, UK GDP increased 16.9% in Q3 and 1.3% in Q4 2020. UK GDP was down 7.3% in Q4 compared to the same quarter in 2019. For the year, UK GDP contracted by a record 9.8% in 2020.
Services output increased by 1.0% in Q4 2020 and is now 6.8% below Q4 2019 levels. The increase was mainly driven by increases in the health and education industries.
Production output increased by 2.0% compared to Q3 2020, and is now 3.2% lower than Q4 2019 levels. Manufacturing rose 3.3% in Q4 2020, driven by increases in nearly all subsectors. Fourth quarter manufacturing output was 2.7% below pre-pandemic levels.
Compared to the previous quarter, Construction output increased 2.7% in Q4 2020. Fourth quarter construction output was 5.9% below Q4 2019 levels. Growth in construction was supported by infrastructure projects and strong demand for household repair and maintenance.
The fourth quarter saw improvements in gross capital formation, government expenditure, exports and imports. Household consumption lowered following a bounce back in Q3, on partial reintroduction of health restrictions. Business investment and household consumption remain 7.4% and 9.2% lower than pre-pandemic (Q4 2019) levels, respectively. The households’ saving ratio increased from 14.3% in Q3 to 16.1% in Q4.
A seasonally adjusted annualized rate shows what the percent change would be if the quarterly rate continued for four quarters. It is computed by compounding the quarterly rate for four quarters. Reporting annualized rates facilitates comparability between annual and quarterly growth but can exaggerate change when series are volatile. The COVID-19 shocks do not indicate growth of UK GDP by 87.1% in Q3 or 5.2% in Q4. It would take four quarters of compounded contraction at the same pace as reported to increase UK GDP by these amounts. Compared to the previous quarter, real GDP increased 16.9% in Q3 and 1.3% in Q4.
Office for National Statistics
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