November 29, 2020

COVID-19: GDP sees record rebound after recession – but growth is slowing – Sky News

https://news.sky.com/story/covid-19-gdp-sees-record-rebound-in-third-quarter-12130473

The UK economy grew by a record 15.5% in the third quarter but remains 8.2% smaller than before the pandemic, official figures show.

Data from the Office for National Statistics (ONS) showed gross domestic product (GDP) bounced back strongly in the July-September period after the pandemic-driven recession in the first half of the year.

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But the pace of growth has started to slow after a boost from the Eat Out to Help Out scheme and summer staycations faded – and hopes for a so-called “V-shaped recovery” have been dashed after the announcement of a new lockdown.

GDP is widely expected to go into reverse again in the final quarter of 2020 – though there are hopes that after that a new vaccine could see the economy return to pre-COVID levels more quickly than previously expected.

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Sunak: Economic recovery has ‘slowed’

Chancellor Rishi Sunak, said: “Today’s figures show that our economy was recovering over the summer, but started to slow going into autumn.

“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.

“There are still hard times ahead, but we will continue to support people through this and ensure nobody is left without hope or opportunity.”

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COVID-19: The economic virus

Britain’s third quarter growth figure was the highest since quarterly records began in 1955 yet fell slightly short of expectations – economists had on average pencilled in expansion closer to 16%.

A monthly breakdown of the data also showed that the pace of recovery from the recession was slowing.

After lockdown measures were eased, GDP rose by 6.3% in July but growth slowed to 2.2% in August and just 1.1% in September.

At the end of September it was 8.2% below its level in February and the size of the economy in the third quarter was 9.7% down from the end of 2019.

Other countries have also reported record growth in the third quarter as they recover from recession while also remaining below pre-pandemic levels.

But in some cases they have been quicker to bounce back.

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Hopes of a V-shaped recovery have faded

The gap between GDP at the end of September and at the end of 2019 is twice as big in the UK as in Italy, Germany and France and nearly three times that of the US, which is 3.5% off over the year-to-date, the ONS said.

Britain’s economy shrank by 2.5% in the first quarter and a record 19.8% in the second quarter.

The ONS said all the main sectors of the UK economy posted record growth in the third quarter though they remained below pre-COVID levels.

In September there was a boost for education as children went back to school and house building continued to recover.

“However, pubs and restaurants saw less business, after the Eat Out to Help Out scheme ended, and accommodation saw less business after a successful summer,” said Jonathan Athow, ONS deputy national statistician for economic statistics.

The ONS added that the pickup in business investment has been much weaker than private consumption.

Last week the Bank of England downgraded its outlook for the UK’s economic performance in 2020 – and now expects GDP to contract by 11% overall.

Figures this week illustrated that despite Mr Sunak’s furlough scheme the crisis is having a stark impact on jobs – with a record 314,000 redundancies in the July-September period despite the economy’s bounce-back over that time.