Retail and tourism among hardest hit as economic recovery slows amid latest coronavirus restrictions

THE pace of the UK’s economic recovery from the coronavirus pandemic has slowed, with retail and tourism among the sectors falling behind as restrictions tightened, a new report shows.

The latest Lloyds Bank UK Recovery Tracker revealed the UK’s economy lagged behind the global benchmark for the first time since June 2020, as consumer facing industries and their suppliers grappled with new restrictions and slowing demand.

Tourism and recreation, particularly important for the South West economy, fell sharply behind the global benchmark in October following the roll-out of various tiered lockdown measures around the UK and as new hospitality curfews and restrictions on social interaction were introduced.

The food and drink sector also fell sharply as a result.

Beverages and food (43.5), household goods (45), technology equipment (52.7), chemicals (51.9), real estate (52.4) and banks (55.2) all dropped below the benchmark in October, while tourism and recreation (25.5) and transportation (43.6) both fell further behind. A reading above 50 signals output is rising, while a reading below 50 indicates output is contracting.

Overall the UK posted a reading of 52.1 (down from 56.5 in September), mirroring the economic slowdown seen across the rest of Europe.

But metals and mining (70.3) was the most notable positive, maintaining its position as the UK sector furthest ahead of the global benchmark for the second month in a row.

UK manufacturing firms outperformed services businesses for an eighth consecutive month in October, highlighting the disparity with consumer facing sectors, such as tourism and recreation, when it comes to restrictions on trade.

The best performing manufacturing sectors – metals and mining 70.3 and automobiles and auto parts 64.6 – were relatively unaffected by the new measures introduced in October, with many experiencing rising order numbers as supply chain disruption continued to ease.

The UK’s healthcare sector posted the highest month-onmonth jump in output growth (59.4 in October vs 51.3 in September), partly reflecting increased activity across the healthcare supply chain due to Covid-19. The Tracker, complied through IHS Markit, provides unique insight into the shape and pace of the UK’s recovery.

Jeavon Lolay, head of economics and market insight, Lloyds Bank Commercial Banking, said: “If, as hoped, a vaccination programme is rolled out, the UK’s recovery should be revived and become more sustainable next year.”