UK GDP loses momentum of recovery + 2.1% month-on-month lower than expected in August
According to the British Bureau of Statistics (ONS), gross domestic product (GDP) in August increased by 2.1% month-on-month, and the growth rate was positive for the fourth straight month, but the new model. It was at its lowest level during the recovery phase from the coronavirus crisis and well below Reuters' forecast of economists (4.6%).
The government’s restaurant support system “Eat Out to Help Out” contributed significantly to the positive growth in August. According to ONS, more than half of the growth was in the accommodation and dining sector, where production increased by 71.4% due to the scheme and the relaxation of lockdown restrictions.
“Although economic activity was confirmed to be recovering in August, the rapid slowdown in growth is still driving production to pre-crisis levels,” said Suren Thiru, head of economics at the British Chamber of Commerce. As it falls below, it indicates that the recovery may be losing momentum. ” “The positive growth in August is not a sign of a sustained V-shaped recovery, but rather a broad reflection of government stimulus measures such as Eat Out to Help Out and the temporary boost from the economic resumption. That’s it. “
Industry groups expressed concern that the entertainment industry was once again in a difficult situation as new restrictions were introduced in September due to the spread of the infection.
Finance Minister Rishi Sunak said today’s index was “a positive for the fourth straight month, but many are worried about what will happen in the winter. We are trying to secure as much employment as possible through the corona crisis, but this will not change.” Stated. He will announce new employment measures today.
Dean Turner, an economist at UBS Global Wealth Management, said a recent survey showed a slowdown in September and could have been exacerbated by restrictions. “It is highly likely that the Bank of England (Central Bank) will be encouraged to expand quantitative easing at the November meeting,” he said.
The pound softened against the dollar and the euro after the release of GDP statistics in August.
According to ONS, the UK economy is still down 9.2% from the level just before the new corona epidemic.
“The economy continued to recover in August, but it was less than in recent months,” said Jonathan Aso, deputy national statistician for ONS.
The service sector, which has a large share of the economy, grew by 2.4% compared to July. It was well below expectations (5.0% growth).
Growth rates in the manufacturing and construction sectors were also below expectations.
Economists have warned that the UK economy could face growth difficulties in the coming months as the number of people infected with the new corona begins to increase in September and the government tightens restrictions on rallies.