The pace of the UK’s economic recovery from the coronavirus crisis has slowed considerably and is far below what experts had hoped for, new figures show today.
Gross National Product (GDP) was up by 2.1% during August, according to data from the Office for National Statistics (ONS).
It was the fourth consecutive month of growth, after the economy took a serious hit during the depths of the coronavirus lockdown. But it is less than half of what experts had expected, and a major slowdown since July.
Analysts expected that GDP would increase by 4.6%, according to a consensus taken by Pantheon Macroeconomics.
In July, GDP was up by 6.4%, and in June it rose by 9.1%, according to ONS data.
The government invested hundreds of millions of pounds to get the economy back on its feet in August, including through its ‘Eat Out to Help Out’ scheme which paid for half a restaurant bill during parts of the month.
It was largely this scheme, and other government initiatives, that encouraged growth across the month, said Suren Thiru, head of economics at the British Chamber of Commerce.
The accommodation and food service sectors contributed 1.25 percentage points of August’s growth in GDP. Thiru said:
The increase in activity in August largely reflects a temporary boost from the economy reopening and government stimulus, including the Eat Out to Help Out scheme, rather than proof of a sustained ‘V’-shaped recovery.
It is now vital that the government is ready to help companies through what will prove to be a “difficult winter,” Thiru added.
The data shows that GDP rose by 8% in the three months to the end of August, marking a major turnaround from the depths of lockdown after GDP dropped a record 19.5% in April.
However, the measure is still 9.2% below where it was in February this year.
ONS deputy national statistician for economic statistics Jonathan Athow said:
The economy continued to recover in August but by less than in recent months.
There was strong growth in restaurants and accommodation due to the easing of lockdown rules, the Eat Out To Help Out scheme, and people choosing summer ‘staycations’.
However, many other parts of the service sector recorded muted growth.
Construction also continued its recovery, with a significant boost from housebuilding.
There was limited growth in manufacturing, which remains down on its pre-pandemic level, with car and aircraft production still much lower than the start of the year.
You can follow rolling coverage of the latest economic and financial news after the release of the UK growth figures over on our business live blog: