UK ECONOMY GREW BY JUST 0.1% IN JULY AS DELTA SPREAD
Delta variant root cause, output rose just 0.1%
Britain’s economy unexpectedly slowed to a crawl in July as the Delta variant of Covid-19 spread rapidly after lockdown restrictions were eased and as a ‘pingdemic’ kept many workers at home selfisolating.
Economic output rose just 0.1 per cent in July, the Office for National Statistics said on Friday, the smallest monthly increase since January when Britain went into a new national lockdown.
Economists polled by Reuters had mostly expected month-on-month growth of 0.6 per cent in gross domestic product. Only two of the 26 analysts had expected such a weak reading.
Finance minister Rishi Sunak said he was confident that the economy would continue to recover from the pandemic.
But the slowdown in growth may bolster
the case of Bank of England officials who think it is premature to talk about withdrawing stimulus, despite growing inflation pressure.
Earlier this week, BOE Governor Andrew Bailey said he saw a levelling-off in the recovery taking place, with labour shortages, global supply chain problems and Brexit disruption combining to stunt the economic recovery.
"Stalling GDP and rising inflation will leave a whiff of stagflation in the air," said Paul Dales, chief UK economist at the Capital Economics consultancy.
Britain saw a sharp increase in Covid19 cases in July as the Delta variant spread rapidly, leading to hundreds of thousands of workers being ordered to stay at home under self-isolation rules which have been relaxed.
The ONS said some businesses had complained of staff being unable to come to work because they were required to self-isolate — the so-called pingdemic and a fall in construction output was linked to post-lockdown problems in global supply chains.
The dominant services sector was flat in July from June with output in consumer-facing services falling for the first time since January, driven mostly by a drop in the retail sector.
Industrial output grew by 1.2 per cent, boosted by the return to production of an oil field, but manufacturing was flat.
Construction output fell by a monthly 1.6 per cent.