BRITAIN is in the “worst economic crisis of any major economy” after output saw a record decline last year.

Union federation the TUC called on the government today to extend the furlough scheme to help the economy recover after Britain’s gross domestic product (GDP) dropped by 9.9 per cent in 2020. 

The fall marks the worst year for Britain’s economy since records began following the second world war, according to the Office for National Statistics (ONS).

But the Bank of England’s historical estimates indicate that the economy last year shrunk at its fastest rate since the 1920s.

An easing of the November lockdown restrictions in December helped the economy by 1.2 per cent, the ONS found.  

The economy was also aided by increased buying in the run-up to Christmas, and stockpiling ahead of the end of the Brexit transition period.

All four economic sectors tracked by the ONS saw a drop in output, with the highest drop seen in the construction sector, which contracted by 12.5 per cent.

Trade Union Congress (TUC) general secretary Frances O’Grady said that the more people are kept in work, the faster the nation can recover. 

But with the job retention scheme set to end in April, millions of people’s jobs are hanging in the balance, she warned.

Ms O’Grady said: “It’s time to end the uncertainty and anxiety. [Chancellor Rishi Sunak] must urgently extend full furlough support to the end of the year to keep jobs safe.

“And he must cancel the pay freeze that is due to hit millions of key workers in April. 

“The last thing our businesses and high streets need is to have consumer spending held down when they are trying to recover.”

Resolution Foundation research director James Smith said: “The ability to sustainably lift lockdown restrictions without the virus caseload increasing will determine when a true recovery can begin, but the strength of that recovery will also be shaped by decisions taken at the upcoming Budget.

“That should include an extension, and gradual phasing out, of the furlough scheme, along with additional grants targeted at sectors most affected by continuing restrictions.”

Shadow chancellor Anneliese Dodds said: “These figures confirm that not only has the UK had the worst death toll in Europe, we’re experiencing the worst economic crisis of any major economy.

“Businesses can’t wait any longer. The Chancellor needs to come forward now with a plan to secure the economy in the months ahead, with support going hand-in-hand with health restrictions.

“We need a smarter furlough scheme that offers certainty beyond April, alongside an extension to the business rates holiday and the vital VAT reduction for hospitality and tourism to give businesses breathing space.

“This crisis has pulled back the curtain on the Conservatives’ insecure economy. We need to rebuild stronger, putting in place the foundations for a better, more secure future.”

Mr Sunak said the figures revealed the “serious shock” the pandemic has had on the economy.

He said: “At the Budget I will set out the next stage of our plan for jobs, and the support we’ll provide through the next phase of pandemic.”