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Coronavirus: UK economy suffers record shock and 'unprecedented' job losses

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·Finance and policy reporter
·3-min read
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Adverts encouraging people to stay at home are displayed in an empty Picadilly Circus, as the UK continues its lockdown to help curb the spread of the coronavirus. Picture date: Thursday April 9, 2020. Photo credit should read: Matt Crossick/Empics
Data provider IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) released their closely watched PMI data for April in the UK. (Matt Crossick/Empics)

UK firms have suffered their worst month of trading and job losses in decades as the coronavirus crisis has wreaked havoc in the economy, new figures show.

Activity in services and manufacturing plunged at its steepest rate and to the lowest levels on record in a closely watched business survey published on Thursday.

The latest figures show Britain’s dominant services sector, from banking to retail and hospitality to the creative industries, has been hit hardest with many firms forced to shut down. 81% of services firms said business had declined. Manufacturing has also seen activity plummet.

Data provider IHS Markit and the Chartered Institute of Procurement & Supply (CIPS) released the latest flash figures from their monthly UK purchasing managers’ index (PMI) survey.

READ MORE: Euro slips as PMI data shows historic crash in eurozone economies

The headline index figure for manufacturing and services combined sank to 12.9 in April, down from an already record-breaking low of 36 in April. The previous historic low since the survey began in the 1990s was 38.1, recorded at the height of the global financial crisis in 2008.

The index figures show the net balance of firms reporting growth or decline in work. It is measured on a scale of 0 to 100, with anything above 50 suggesting most firms are growing and below 50 suggesting their output is falling.

UK April PMI data, on the net balance of firms reporting growth or decline, shows a record collapse in activity.
UK April PMI data, on the net balance of firms reporting growth or decline, shows a record collapse in activity.

Analysts had expected the data to show record declines, but the numbers came in well below most expectations. The survey also showed a record drop in prices charged by firms, with collapsing demand forcing them to discount goods and services.

“The figures for April could not be more worrying but as we may not have reached pandemic peak yet, there’s much more bad news to come,” said Duncan Brock, group director at the CIPS.

READ MORE: UK firms ‘up to £20bn out of pocket’ waiting for furlough grants

Chris Williamson, chief business economist at IHS Markit, said firms were reporting job losses “on an unprecedented scale,” even excluding furloughed workers on government-funded leave.

Lay-offs have mounted and separate surveys show hiring has fallen off at its fastest pace since the global financial crisis in 2009.

More than 1.5 million people have applied for universal credit, Britain’s main out-of-work benefit. At least 2.2 million others have been put on government-funded temporary leave through HMRC’s furlough scheme for workers at risk of redundancy.

Williamson added: “The dire survey readings will inevitably raise questions about the cost of the lockdown, and how long current containment measures will last.”

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