Rebound after lockdowns stronger than first thought

BRITAIN’S economic bounce-back was faster than thought after lockdowns were lifted, official figures show.

In a relief for chancellor Rishi Sunak (pictured), spending surged to boost gross domestic product by 5.5 per cent between April and June – up from the initial estimate by the Office for National Statistics (ONS) of 4.8 per cent.

Household spending was the biggest factor as restrictions eased to allow outdoor dining in April, with further restrictions lifted in May. The savings ratio fell to 11.7 per cent from 18.4 per cent in the first three months of 2021, which was the second highest on record.

Jonathan Athow, deputy national statistician at the ONS, said: ‘Household saving fell particularly strongly in the latest quarter from the record highs seen during the pandemic, as many people were again able to spend on shopping, eating out and driving their cars.’ However, there has been a marked slowdown in the recovery. Economic growth eased to 0.1 per cent in July, down from 1.4 per cent in June, and there are fears supply chain woes are further hampering the recovery. Martin Beck, senior economic adviser to the EY Item Club, said: ‘Headwinds to growth from supply disruption, the negative effects on household spending power, sentiment from rising inflation and energy prices mean the recovery is looking more fragile.’

Many sectors are being held back by the supply chain crisis and lorry driver shortage, while there are worries that soaring inflation will see consumers rein in their spending.

The Bank of England has slashed its expectations for third quarter growth to 2.1 per cent from 2.9 per cent forecast in August.