UK economy advances despite lockdown as trade picture improves
London, UK - Britain’s economy rebounded slightly in February despite coronavirus curbs while exports of goods to the European Union recovered a bit more, data showed on Tuesday, sparking optimism over the outlook.
Gross domestic product rose by 0.4 per cent in February, after shrinking by 2.2 per cent in January, the Office for National Statistics (ONS) said in a statement, noting a boost in industrial output and consumer spending.
“The economy showed some improvement in February after the large falls seen at the start of the year,” an ONS spokeswoman remarked.
Activity grew despite England’s latest COVID-19 lockdown, which was implemented in early January but partially eased this week on the back of a rapid vaccination drive.
From Monday non-essential retailers and hairdressers reopened. The phased reopening, in tandem with speedy vaccinations, has sparked hopes for a rebound in economic activity in the current second quarter or three months to June.
“January was probably the low point of the year as vaccinations and the reopening of the economy will combine to trigger a rapid rebound in activity over the next few months,” said Capital Economics economist Thomas Pugh.
“Given there was no change in the lockdown restrictions in February, GDP was never going to shoot back up.”
Pantheon Macro economist Samuel Tombs added that ‘the economy continued to adapt to lockdown rules in February’.
The Bank of England has forecast that growth will recover strongly this year towards its pre-COVID level owing to the nation’s speedy vaccine programme.
The economy had tanked by 9.8 percent last year, Britain’s biggest slump in three centuries - and the worst G7 performance.
The ONS added on Tuesday that the economy remains 7.8 per cent smaller than its prepandemic level in February 2020.
January’s economic decline nevertheless marked an improvement from the previous estimate of a 2.9 per cent contraction.
Exports ‘recover significantly’
The ONS revealed separately that UK exports to the continent rebounded sharply in February.
However, the performance still failed to reverse January’s record Brexit-driven slump.
The value of British goods exported to the EU jumped by 46.6 per cent or £3.7bn from the prior month, driven by cars and pharmaceuticals.
The nation’s EU exports had nosedived by a record 42 per cent or £5.7bn in January.
“Exports to the EU recovered significantly from their January fall, though still remain below 2020 levels,” the ONS spokeswoman added.
“However, imports from the EU are yet to significantly rebound, with a number of issues hampering trade.”
February’s total British goods exports to the EU stood at £11.6bn, up from £7.9bn in January.
Analyst Tombs noted this was ‘only marginally lower’ than last year’s £12bon pre-Brexit monthly average.
“This indicates that Brexit disruptions to goods trade have been overcome quickly,” Tombs remarked.
The value of EU goods imported into Britain meanwhile rose by 7.3 per cent or £1.2bn in February, after a record fall of 29.7 per cent or £6.7bn in January.
The nation’s Brexit divorce took full effect at the end of last year, after Prime Minister Boris Johnson clinched a last-minute trade deal with Brussels.