UK economy picks up speed on lockdown exit

23 May, 2021 12:00 AM printer

LONDON: Britain’s economic recovery is picking up speed in the second quarter as it gradually exits coronavirus lockdowns, bright data showed Friday.

Covid had sparked a major collapse in Britain’s economy last year—the worst in the G7 -- but recovery hopes are now rising thanks to mass vaccinations that have enabled a phased reopening, reports AFP.

At the same time, stock markets have wobbled in recent weeks over concerns that the reopening of economies around the world could spark a global inflationary spike.

British retail sales surged by 9.2 percent in April as non-essential stores reopened, official data showed Friday.

Demand for clothing rocketed by almost 70 percent as consumers splashed their cash on new outfits.

Easing travel restrictions prompted a similar spike in demand for motor fuel.

Britain’s private sector activity meanwhile enjoyed record growth in May thanks to strength in manufacturing and services.

IHS Markit’s Britain composite Purchasing Managers’ Index (PMI) survey, a key gauge of business activity, jumped to 62.0.

That marked the highest level since the index began in January 1998.

The reading compared with 60.7 in April and remained above the 50-point level that indicates growth.

“The UK is enjoying an unprecedented growth spurt as the economy reopens,” said IHS Markit chief business economist Chris Williamson.

“Factory orders are surging at a record pace as global demand for goods continues to revive, and the service sector is reporting near-record growth as the opening up of the economy allows more businesses to trade,” he added.

Hotels, restaurants and other consumer-facing services reported the strongest upturns in demand.

“Business confidence has meanwhile hit an all-time high as concerns about the impact of the pandemic continue to fade,” said Williamson.

Britain is exiting lockdowns at a gradual pace.

The stay-at-home order began to be lifted in early March, while pubs, restaurants and cafes reopened last month—alongside non-essential retail—but had been limited to outdoor dining and drinking.

Non-essential retailers reopened for business from April 12 in England and Wales and two weeks later in Scotland.

“Pent-up demand built up during lockdown continues to be released as the reopening of non-essential retail offered the public a welcomed opportunity to visit many of their favourite shop,” British Retail Consortium boss Helen Dickinson said Friday.

“Improved weather during April meant greater sales of fashion, particularly in outerwear and knitwear, as the public renewed their wardrobe and made plans to meet friends and family outdoors.”

Retail sales rocketed 42.4 percent compared with April last year, which was the first full month of the initial UK lockdown.