England’s economy shrank less than expected in January when the country went back into a coronavirus lockdown, but trade with the European Union was hit as new post-Brexit rules took effect.
Gross domestic product was 2.9 per cent lower than in December, the Office for National Statistics (ONS) said.
The UK suffered its worst economic slump in three centuries last year when it contracted by 10 per cent. It has also been hit with Europe’s biggest Covid-19 death toll of over 125,000 people.
But the country is ahead with its vaccination programme as the nation races to come out of its third national lockdown.
Economists said they expected the economy to shrink by two per cent in the first quarter of 2021, half the hit forecast by economists last month.
The BoE looks set to keep its stimulus programmes on hold next Thursday.
The ONS figures also showed exports and imports from Britain to the EU fell by the most on record.
Exports of goods to the EU, excluding non-monetary gold and other precious metals, fell by 40.7 per cent. Imports fell by 28.8 per cent.
The overall GDP figures were hit hard by the effect of social distancing rules on Britain’s services sector. The ONS said services output shrank by 3.5 per cent in January from December.
Manufacturing fell for the first time since April with car production down sharply.
The economy remained nine per cent smaller than in February last year, before the pandemic hit.
Prime Minister Boris Johnson plans to ease England’s coronavirus restrictions in stages before lifting most of them by June 21.