The UK music industry is set to halve in size this year as issues including an effective shutdown of concerts, gigs and festivals strip £3bn from its contribution to the economy.

UK Music, the umbrella organisation representing the commercial music industry from artists and record labels to the live music sector, has revealed that the industry grew by 11% last year to be worth £5.8bn to the UK economy.

However, the organisation’s annual Music by Numbers report, published on Wednesday, which gauges the economic health of the industry, painted a dire picture of the impact of the coronavirus on the sector. It is expected that the music industry’s contribution to the wider UK economy, spanning music sales and licensing to stadium tours, gigs in grass roots venues and merchandise, is likely to plummet to about £3bn this year. UK Music measures the industry’s contribution as gross value added, or GVA, which also includes British music exported overseas, such as tours.

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Jamie Njoku-Goodwin, the chief executive of UK Music, said that the pandemic has dealt a “catastrophic blow” with tens of thousands out of the almost 200,000 people who work in the industry at risk of losing their jobs.

“Our music industry is a key national asset,” said Njoku-Goodwin. “As this report shows, it contributes £5.8bn a year to the economy, generates £2.9bn in exports and supports almost 200,000 jobs. The UK music industry was a vibrant, fast-growing and commercially successful sector before the pandemic hit.”

The hardest hit sector has been live music – including festivals and music venues – which enjoyed its most successful year to date in 2019 as bands including Eagles, Bon Jovi, Spice Girls and Take That packed UK venues. Last year, the live music sector grew by almost a fifth to a record £1.3bn. This year, which had been predicted to be even stronger, will record a slump of as much as 85%, with live music’s GVA expected to plummet to about £300m as touring halts and social distancing keeps most venues shut.

The report also says that music creators – which include global artists such as Dua Lipa and Ed Sheeran as well as tens of thousands of other musicians, songwriters and producers – who rely “very heavily” on live music will have their income mostly wiped out this year. In 2019, music creators were estimated to have generated £2.7bn GVA for the UK economy.

“In aggregate over 65% of music creators’ income will be lost as a direct consequence of Covid-19 and this could extend to over 80% for those most reliant on live performance,” the report said.

The one bright spot amid the pandemic has been the resilience of the streaming music sector. While the report does not estimate the value of the sector to the UK music industry this year, Spotify, a bellwether for the health of streaming globally, reported an increase of almost 30% in paying subscribers during the lockdown.

“We know what an immensely tough year 2020 has been for the music industry as a result of Covid-19,” said Caroline Dinenage, the minister for digital and culture. “That is why the government stepped in with an unprecedented £1.57bn culture recovery fund to help the sector weather the impact of coronavirus and protect music venues, festivals and our vital cultural assets.”