UK economy sees record recovery after virus slump
BRITAIN’S economy enjoyed a record third-quarter rebound from its deepest ever recession, data showed last Thursday (12), but experts predict another slump after fresh coronavirus restrictions were introduced to curb the pandemic.
Gross domestic product (GDP) expanded by 15.5 per cent in the July-September period, after an initial coronavirus lockdown was eased, the Office for National Statistics said in a statement.
Activity bounced back after shrinking by almost a fifth in the second quarter on the back of the first lockdown.
But the economy is still grappling with the virus fallout, according to the data, which was published one day after Britain’s Covid-19 death toll passed the grim milestone of 50,000 – the highest in Europe.
Growth slowed in September with a month-on-month expansion of just 1.1 per cent, after the end of the government’s restaurant discount scheme for the devastated hospitality sector.
Output was also hit after more localised measures to control the virus were imposed in parts of northern and central England, as well as in Scotland and Wales.
England-wide restrictions, which began earlier this month, are set to spark another slump in the current fourth quarter or three months to December, analysts warn. “Today’s figures show that our economy was recovering over the summer, but started to slow going into autumn,” said chancellor Rishi Sunak.
“The steps we’ve had to take since to halt the spread of the virus mean growth has likely slowed further since then. But there are reasons to be cautiously optimistic on the health side – including promising news on tests and vaccines.”
Sunak last week announced a new multi-billion-pound support package, extending his government’s furlough jobs scheme to the end of March.
The Bank of England (BoE) at the same time injected an extra £150 billion in cash stimulus to lift economic growth.
The ONS last Thursday said the UK economy was 9.7 per cent smaller than its level late last year, in line with BoE forecasts.
The outlook brightened somewhat after US pharma giant Pfizer and Germany’s BioNTech announced on Monday that their candidate for a Covid-19 vaccine had been 90 per cent effective, boosting hopes of a return to normality next year. BoE governor Andrew Bailey last Thursday described the vaccine announcement as “encouraging”, adding that it “reduces uncertainty”.
The National Institute of Economic and Social Research (NIESR) think tank has forecast a 2.2-per cent contraction.
“Growth in the fourth quarter will be much slower than in the third quarter and is likely to turn negative, due to weaker growth in October and a second lockdown from November,” said NIESR economist Kemar Whyte.
“Our expectations for the fourth quarter and beyond will depend on the stringency and duration of ongoing lockdowns.”
Britain plunged into a historic downturn after imposing a nationwide lockdown on March 23 that lasted until mid-June.