WATCH: UK economy shrank by record 10% in 2020

European stocks were flat for most of Friday, with the FTSE 100 (^FTSE) closing 0.84% higher as new data published by the Office for National Statistics (ONS) showed UK GDP declined by 9.9% last year, which was the largest contraction on record.

The DAX (^GDAXI) ended 0.02% up, while the CAC (^FCHI) climbed 0.60%.

The GDP slump came after a historic recession at the start of the year, caused by the onset of the COVID-19 pandemic in February and March. The UK economy began to rebound in the third quarter but remains 7.8% smaller than it was at the end of 2019, the ONS said.

The annual fall wiped out seven years-worth of growth, taking the UK economy back to the size it was in 2013.

The UK barely escaped shrinking at the end of 2020. The Office for National Statistics said UK GDP grew by 1% in the fourth quarter of 2020. The performance was in-line with City forecasts.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The UK may have swerved a technical double dip recession, but the record breaking annual fall in economic output underlines the damage wreaked by COVID on businesses up and down the country."

READ MORE: UK economy shrank by record 10% in 2020

It marks a fairly uneventful week for European equity markets, with airline, travel and leisure stocks amongst the worst performers on Friday.

IG market analyst Joshua Mahony said travel stocks were being hit amid growing fears over the potential impact of the more concerning Bristol Covid-19 variant.

"Recent value stock gains have been built on the notion that the vaccination programme and reopening process is linear and predictable by nature, yet strains in South Africa and now Bristol highlight the potential to derail that presumption," he said.

WATCH: Pandemic causes UK economy to suffer record annual slump

Across the pond, the S&P 500 (^GSPC) and the tech-heavy Nasdaq (^IXIC) were both higher at the European close, rising 0.16% and 0.14% respectively. The Dow Jones (^DJI) shed 0.03%.

Richard Hunter, head of markets at Interactive Investor, said: “In the US, markets are edging towards a listless end to the week, as the outcome of political negotiations are awaited on the President’s proposed relief package and with some reports of a Covid-19 variant emerging in California.”

Overnight, Asian shares hovered below all-time highs on Friday as mixed US economic data caused some investors to hold back after a global stock market rally pushed many bourses to record heights.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.05%, trading just shy of a high reached in the previous session. Shares in Tokyo fell, with the Nikkei (^N225) down 0.14%, pulling back from 30-year highs.

Markets in Greater China and most of Southeast Asia were closed for the Lunar New Year holiday. China's stock and bond markets, foreign exchange and commodity futures markets are closed through 17 February for the holiday.

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