Sunday, 24 October, 2021

UK economic grows by 0.4pc in Aug

UK economic grows by 0.4pc in Aug

Popular News

LONDON: Britain’s economy grew by 0.4 per cent in August, leaving it just 0.8 per cent smaller than pre-pandemic levels.

But the figures suggest a slowdown in the recovery as supply chain woes take their toll.

Economic output fell short of expectations of 0.5 per cent growth, despite improved trading at hospitality venues such as restaurants and cafes after Covid-19 restrictions were removed, the Office for National Statistics said, report agencies.

The ONS also revised down its GDP figure for July on weaker data from industries such as car manufacturing, with the economy now believed to have contracted 0.1 per cent in July, rather than growing 0.1 per cent.

Chancellor of the Exchequer Rishi Sunak said the economic recovery is continuing “with more employees on payrolls than ever before and the UK forecast to have the fastest growth in the G7 this year”.

“As we rebuild from the pandemic, we are taking action to ensure our economy remains strong by helping people find great work,” he said.

The services sector made the biggest contribution to an increase in economic output in the first full month after all Covid restrictions were lifted in England on July 19, with arts, entertainment and recreation growing 9 per cent, boosted by sports clubs, amusement parks and festivals.

There was also more demand for hotels and campsites.

However, this was offset by declines in health activity, said Darren Morgan, director of economic statistics at the ONS, with fewer people visiting doctors and less testing and tracing.

“However, later and slightly weaker data from a number of industries now mean we estimate the economy fell a little overall in July,” Mr Morgan said.

Susannah Streeter, senior investment and markets analyst at investment platform Hargreaves Lansdown, said the economy cannot rely on “happy campers” to sustain growth, given the storm clouds that have gathered over supply chains since the summer.

“It’s likely that the 0.4 per cent growth in economic output overall in August was partly put due to the mini bounce back from the ‘pingdemic’, which pushed a million people into self isolation in July,” Ms Streeter said.

“Weakness is seeping through these figures, especially in the construction sector which shrank again for the fourth month in a row, by 0.2 per cent … raw material shortages are likely to have been partly to blame, as well as the difficulties of getting boots on the ground in building sites as sectors fight for skills, with 1.1 million vacancies opening up between July and September.”

August saw the second monthly fall in output for the construction sector, which suffered a 1 per cent decline in July as supply issues have led to shortages of key materials and rocketing prices.

Despite recovering in April to be 0.9 per cent above levels seen before the pandemic, the construction sector is now 1.5 per cent smaller than its pre-Covid level.