London (AFP)

Private sector activity experienced a severe relapse in January in the United Kingdom due to the strict containment put in place in the face of the pandemic, fueling fears of a double recession.

The "flash" PMI index, a first estimate for the current month, plummeted to 40.6 points, against 50.4 points in December, announced Friday the firm Markit.

An index below 50 indicates a contraction in activity.

The latter progresses when it is above this threshold.

This is an eight-month low, the month of May, which shows that the January containment has a stronger impact as expected than the less strict one of November.

This sudden decline in the PMI is explained by a plunge in services, given the closure of many businesses.

In contrast, the PMI is above 50 in industry, since factories are not at a standstill.

"The UK economy is set to contract sharply in the first quarter of 2021, which means a double recession is in sight," said Chris Williamson, economist at IHS Markit.

This new recession, given the gloomy end of the year and the difficult start of 2021, would come after the one in spring and the rebound in summer.

Mr. Williamson notes, however, that the drop in activity "is much less marked than during the first confinement".

And according to him "companies are more optimistic on the prospects mainly thanks to the progress in the deployment of the vaccines".

Earlier on Friday, the National Bureau of Statistics (ONS) published several figures confirming the sluggishness of the economy at the end of 2020.

UK retail sales edged up 0.3% in December on a month-to-month basis, after falling in November with containment.

In December, when stores were able to reopen for a while, consumption remained weak, even though clothing rebounded strongly.

In total, retail sales fell 1.9% over the whole of 2020, the biggest drop on record, due to restrictions linked to the pandemic.

In addition, the public deficit was 34.1 billion pounds in December, still fueled by the cost of government measures to cushion the shock of the health crisis.

It has climbed since the start of the fiscal year in April, and reached 270.8 billion pounds, or 212.7 billion more than a year earlier in the same nine-month period.

This is the highest figure since the start of data collection in 1993.

The public debt stood at 2,131.7 billion pounds, a higher, or 99.4% of gross domestic product (GDP).

"The retail sales and public finance figures for December confirm that it was not a very merry Christmas for traders and that the government continued to foot the bill for the pandemic," summarizes Paul Dales, economist at Capital. Economics.

For Mr. Dales, the economic data "shows how much the economy still needs government financial support."

"The Chancellor should make this the priority for his March 3 budget rather than reducing the deficit by raising taxes."

According to the British press, the Minister of Finance, or Chancellor of the Exchequer, Rishi Sunak, is looking for ways to start reducing the public deficit and is considering taxing companies more.

"As I said before, once our economy starts to recover, we will need to ensure that public finances are on a more sustainable path," Sunak said on Friday in reaction to the deficit figures.

© 2021 AFP