Garages count cost of 20.4% April economic contraction

Published:  12 June, 2020

Garages can now see the scale of the economic challenge ahead, with figures being released today (Friday 12 June) that show the UK economy shrank by 20.4% in April, which was the first full month of lockdown following the imposition of COVID-19 measures.

The drop was the biggest monthly contraction since records began in 1997, beating the impact of the entire 2008-2009 banking crisis by a factor of three.

With new car sales already down 97.3% in April and 89% down in May according to the figures from the SMMT, garages could expect to see demand rise as motorists keep their cars for longer. However, damage to the wider economy could mean that some drivers eschew even essential repairs.

According to The Office for National Statistics (ONS) the drop was "historic" and affected almost all areas of activity, including the aftermarket. According to GiPA, at the start of the lockdown period in the final days of March, only 47% of garages in the UK were open. In early June, this number had risen to 54%. Meanwhile, the sector in other European countries were either fully or partially back to full strength, with Germany’s garages 100% open, Italy’s 94% open and France’s 90% open.

April is expected to be the deepest point of the drop, as UK lockdown measures were already easing in May, and this trend has continued. The ONS also released figures looking at the larger picture, taking in the whole February-April period. This showed a 10.4% decline.

Commenting on the figures, Chancellor of the Exchequer Rishi Sunak said:  "In line with many other economies around the world, coronavirus is having a severe impact on our economy. The lifelines we've provided with our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs - giving us the best chance of recovering quickly as the economy reopens."

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