Coronavirus: Which areas have taken the biggest economic hit of the lockdown?

Hotels, pubs and restaurants have borne the brunt of the economic havoc caused by the coronavirus pandemic, official figures show.

While nearly every part of the economy has shrunk as a result of the COVID-19 crisis – contributing to a record drop in GDP of 20.4% – the closure-hit food and accommodation sector has seen the biggest downturn, plummeting by 40.9% in the three months to April.

With people advised to stay at home and avoid travelling in a bid to curb the spread of the coronavirus, the transport sector contracted by 18.3% over the period.

The economically important construction industry, including housebuilding, also took a similar-sized hit – recording a fall of 18.2%.

The closure of most shops during the crisis saw the retail sector shrink by 14.5%, while manufacturing fell by 10.5%, with factories forced to shut and order books drying up.

Figures published by the Office for National Statistics reveal only one part of the economy did not shrink over the three months, that of public administration and defence, which was shown to have flatlined.

The government will be hoping that the move to ease the lockdown restrictions will help sow the seeds of the economic recovery.

Prime Minister Boris Johnson said he was “not surprised” at the statistics, pointing out the UK was heavily dependent on services, which relied “so much on human contact”, but he predicted the UK economy would “bounce back” as the rules are gradually lifted.

However, speaking to Sky News, Peter Dixon, senior economist at Commerzbank, said: “If you look at where the economy is now, obviously we have had a major falling off the cliff and the question now is do we go further down or rebound slightly.”

Data currently indicated the recovery would be a “slow haul” he said and added: “At the moment I think it is going to be a fairly grim economic summer.

“This really is unprecedented. This is the economy really hitting the buffers very hard.

“It’s a bit like a car crash. When a car hits the barriers at high speed it leaves a lot of damage.

“The concern is that the same will happen to the UK and indeed other economies around the world, particularly with regard to the labour market as a number of industries just can’t back on their feet.

“With the coronavirus job retention scheme likely to be phased out during the course of this year, then we will see just how resilient the economy is.”

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With the easing of restrictions, he added: “I rather suspect we will see a pick up in spending but suspect it will be a long time before we get back to the peaks prior to the crisis.”

In the light of the bleak data, Tej Parikh, chief economist at the Institute of Directors, said many businesses will still need support as lockdown slowly lifts.

“Emergency loan schemes have helped stop firms collapsing, but left many saddled with debt,” he said.

“Businesses will be reluctant to hire and spend on new projects as they repair their finances, particularly as social distancing eats into demand and productivity.

“Firms will continue to face cashflow challenges in the months ahead.”

(c) Sky News 2020: Coronavirus: Which areas have taken the biggest economic hit of the lockdown?