UK economy grows 2.1% – less than half the rise expected
Written by Rother Radio News on 09/10/2020
The economy grew 2.1% in August but remained 9.2% below its February level, official figures show.
Even the Eat Out To Help Out scheme failed to get the economy anywhere near the 4.6% rise analysts had been expecting.
The Office for National Statistics said the manufacturing sector grew by 0.7% (still 8.5% below February’s figure) and construction grew by 3% (10.8% below February).
The services sector, which accounts for around 80% of the UK economy, grew by 2.4%, leaving it 9.6% below the level seen in February.
More than half of the economic growth in August came from the accommodation and food sector – this was boosted by the Eat Out to Help Out scheme and ‘staycations’, according to ONS deputy national statistician for economic statistics Jonathan Athow.
Month-on-month growth was recorded in May and in June.
It comes as restrictions are expected to be announced for pubs and restaurants in the north of England and the Midlands on Monday.
It also comes amid warnings of a deepening employment crisis as the Job Retention Scheme, that has supported the wages of almost 10 million people during the crisis, is wound down.
The Bank of England has predicted that the UK could have three million unemployed by the end of the year, while business groups say an exit from the EU without a trade deal in January risks deepening the damage.
Chancellor Rishi Sunak will today be setting out the next stage in measures to support businesses that may have to close in the coming weeks and months, due to the increasing number of coronavirus cases.
Responding to the GDP figures, he said: “Today’s figures show our economy has grown for four consecutive months, but I know that many people are worried about the coming winter months.
“Throughout this crisis, my single focus has been jobs – protecting as many jobs as possible, and providing support for people to find other opportunities where this isn’t possible. This goal remains unchanged.
“That’s why we’re investing billions to help people back to work and provide fresh opportunities to those that have sadly lost their jobs so that nobody is left without hope.”
British Chambers of Commerce head of economics Suren Thiru said: “The increase in activity in August largely reflects a temporary boost from the from the economy reopening and government stimulus, including the Eat Out to Help Out Scheme, rather than proof of a sustained ‘V’-shaped recovery.
“Although the UK remains on course to exit recession in the third quarter, the looming triple threat of surging unemployment, further restrictions and a disorderly end to the transition period means the recent rally in economic output is likely to be short-lived.”
Jeremy Thomson-Cook, chief economist at Equals Money said: “So much for the V-shaped recovery. The UK GDP data released this morning shows August’s rate of growth fell to a third of what it was able to reach in July, confirming that the UK’s recovery is not V-shaped.”
© Sky News 2020