The Press and Journal (Inverness, Highlands, and Islands)
Hopes of a V-shaped recovery fading as new data is released
Economy: Coronavirus impact laid bare in latest ONS figures
Hopes of a V-shaped recovery for the UK economy are fading after official figures showing a modest 1.8% rise in gross domestic product (GDP) in May.
Delivering its latest gauge of the economic impact of Covid-19, the Office for National Statistics (ONS) said production, services and construction output was still well below February 2020 levels.
Retail and supporting sectors grew slightly in May, mainly because of an increase in online shopping.
Manufacturing and constructionalsopicked up as lockdown restrictions started to ease, but the services sector struggled due to a lack of demand from business customers amid the pandemic.
“It is likely to take years, not months, to repair the damage”
Total economic output was 24.5% below February’s level and the slight improvement from April after a two-month battering from Covid-19 was much weaker than many leading economists expected.
Deloitte chief economist Ian Stewart said: “The bounce-back from
Covid-19 has got off to a disappointing start.
“The chances of a quick return to normal, of the famed V-shaped recovery, are falling.
“It is likely to take years, not months, to repair the damage to the economy done by Covid-19.”
Howard Archer, chief economic advisor to the EY Item Club, said: “It is clear the contraction in GDP in the second quarter is now going to be greater than previously anticipated.
“The EY Item Club had been expecting GDP to contract around 17%... but a decline in the vicinity of 20% quarter-on-quarter now looks more likely.”
Institute of Directors chief economist Tej
Parikh said: “These figures underline that a return to normality won’t be straightforward for the UK economy. There is a big question mark around how fast we can rebound back to pre-pandemic levels.
“Firms continue to face significant uncertainty around consumer demand and are still adjusting to operating under social distancing.
“Meanwhile, the debt some businesses have built up during the crisis could weigh down investment and hiring decisions, hurting performance in the longer term.”
Mr Parikh added: “While some of the chancellor’s announcements last week may have gone down well, he may yet need to return to the plate before the Autumn Budget to stimulate the economy.
“Broader measures to lower employment costs and support business investment will be vital to help the economy jump out of this crisis.”