The impact of COVID-19 on the United Kingdom adversely affected travel, financial markets, employment, a number of industries, and shipping
The impact of COVID-19 on the United Kingdom adversely affected travel, financial markets, employment, a number of industries, and shipping. The UK's economy is likely to slump by 11.5% in 2020, slightly outstripping falls in countries such as Germany, France, Spain and Italy.
According to the National Grid, electricity demand fell by as much as 20% during the height of lockdown, and demand remained 9% lower in July 2020 compared with the same month in 2019. This necessitated rebalancing costs of £139 million in July 2020, 96% higher than in July 2019. Overall, year-to-date rebalancing costs in 2020 are 60% higher than the same period in 2019, at £996 million.
Based on data published by the ONS, a report by Catax estimates that total business investment in the utilities sector fell by 9% in the first quarter of 2020 to £3.9 billion, from £4.3 billion in Q1 2019. This was due to concerns over a potential rise in future bad debt caused by the coronavirus outbreak.
According to the ONS, output in the construction sector fell by 35% over the three months through June 2020; this includes a 51.2% decline in private new housing output and a 33.4% decline in private commercial output. However, having increased in May and June, construction output continued its recovery in July 2020, recording growth of 17.6%. Despite this, construction output remained 11.6% below February 2020 levels.
Major aerospace manufacturer Rolls Royce has announced that it is to cut 9,000 jobs as a result of the coronavirus. UK supercar maker McLaren also plans to cut more than a quarter of its 4,000-strong workforce.
According to the ONS, manufacturing output fell by 20.2% during the three months through June 2020. This was driven by declines in 12 out of 13 subsectors, most notably the manufacture of transport equipment, which fell by 49.1%. However, manufacturing output recorded growth of 6.3% in July 2020, representing the third consecutive month of expansion. Despite this, manufacturing output remained 8.7% below February 2020 levels.
Every major carmaker in the United Kingdom suspended or cut production during the height of the coronavirus outbreak. This includes Vauxhall owner Peugeot, Nissan, Honda, BMW and Toyota. The Society of Motor Manufacturers and Traders (SMMT) estimates that this will cause an 18% drop in UK car production in 2020.
According to the SMMT, new car registrations were down 4.4% in September 2020 compared with the same month in the previous year, marking the worst September for car production since 1999. Year-to-date registrations were down 33.2% compared with 2019.
In the ONS Business Impact of COVID-19 Survey conducted between 24 August and 6 September, 46.7% of firms in the manufacturing sector stated that their revenue remained below what they would usually expect for the time of year.
According to the Civil Aviation Authority, the number of terminal and transit passengers at all UK reporting airports was up 200.6% in July 2020 compared with June 2020. However, the number remained 93% down in the same month in 2019. This followed a 98.2% year-on-year decline in passenger numbers over the three months through June 2020.
The COVID-19 outbreak has significantly affected the global economy. First identified in Wuhan, China, the coronavirus has spread globally, with Ireland no exception.
According to the Central Statistics Office (CSO), a sharp increase in the national unemployment rate, to 5.4% in March, 2020. The same body also stated that the COVID-19 adjusted unemployment rate was as high as 16.5%.
The Irish automotive sector was also affected badly by the COVID-19. According to the Society of the Irish Motor Industry, the outbreak has decimated demand, with new vehicle registrations falling by 63.1% in March 2020 as just 6,150 vehicles were registered, down from 16,600 in the same month in the previous year.
Major commercial flight operators Ryanair and Aer Lingus have grounded the majority of their fleets as many countries have closed their borders, leading to a significant short-term decline in revenue for the Passenger Air Transport industry.
The Central Bank of Ireland (CBI) estimates that GDP will fall by 11% in 2020, erasing gains made at the beginning of the year. However, the bank also stated that this percentage is contingent on the success of containment measures and the effectiveness of fiscal and monetary policies.
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