The UK economy returned to growth amid a boom in staycation spending and Brits making the most of an easing in self-isolation rules by rushing to pubs, bars and restaurants.
The economy expanded 0.4 per cent in August, a resumption of growth after the Office for National Statistics (ONS) marked down July’s figure to minus 0.1 per cent.
The rebound was largely driven by the services industry receiving a bump from households choosing to holiday in the UK amid ongoing Covid-related travel restrictions across the world. Output at travel agents and tour operators soard 47.9 per cent over the last month.
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Food and beverages services notched a 5.9 per cent jump in output, as consumers capitalised on the last of the summer weather. Reservations over being forced to self-isolate after contraction Covid-19 receded following the easing of isolation rules.
Darren Morgan, director of economic statistics at the ONS, said: “The economy picked up in August as bars, restaurants and festivals benefited from the first full month without COVID-19 restrictions in England.”
However, the UK economy is still 0.8 per cent smaller than it was before the pandemic.
Chancellor Rishi Sunak said: “Our economic recovery is continuing with more employees on payrolls than ever before and the UK forecast to have the fastest growth in the G7 this year.”
James Smith, developed markets economist at ING, said: “Activity in hospitality and recreation/culture is essentially back to pre-virus levels, which suggests that the economy weathered the Delta Covid-19 wave better than we’d feared at the time.”
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Britain’s heavy industries were hit hard by severe supply-side constraints triggered by ongoing global supply chain snarling up.
Growth was weighed down by 0.1 per cent contraction in manufacturing output, mainly driven by a 7.8 per cent fall in motor vehicles output as a result of microchip shortages clamping down on production.
Meanwhile, construction output dipped 0.2 per cent, partly reflecting “recent challenges faced by the construction industry from rising input prices and in delays to the availability of construction products,” the ONS said.
Despite the return to growth, the economy will need to grow around 2.2 per cent in September for third quarter growth to reach the Bank of England’s forecasts.
Meanwhile, the International Monetary Fund (IMF) yesterday downgraded their estimates for UK growth this year to 6.8 per cent. The UK suffered one of the worst hits to output out of all developed nations from the pandemic.
By Jack Barnett
Source: City AM