UK GDP grew 0.4% in Aug as Covid curbs continue to ease

The UK’s gross domestic product (GDP) is estimated to have grown by 0.4 per cent monthly in August as Covid-19 restrictions continued to ease across the country, the Office for National Statistics (ONS) said.

However, the economy is still 0.8 per cent below the pre-pandemic level in February 2020, Xinhua news agency quoted the ONS as saying on Wednesday.

In August, the services and production sector grew by 0.3 per cent and 0.8 per cent month-on-month, respectively, whereas output in the construction sector fell by 0.2 per cent, the ONS said.

Notably, output in consumer-facing services increased by 1.2 per cent in August, with most of the growth in the services coming from “a 5.9 per cent increase in food and beverage service activities, and a 47.9 per cent increase in travel agency, tour operator and other related reservation services (growing from historically low levels)”, said the ONS.

“The recovery in hospitality and culture/recreation activity in the UK is essentially complete, according to August GDP — a striking reconvergence with consumer goods trade over summer,” said James Smith, a developed markets economist at financial services firm ING.

Julian Jessop, a British independent economist, said: “Economic activity just about on track to return to its pre-COVID level this Autumn, which would be much sooner than most had expected at the start of the year.”

“The 0.4 per cent month-on-month rise in GDP in August confirms that the rapid gains in output, which in just 16 months lifted GDP from being 25.1 per cent below its February 2020 pre-pandemic peak to 0.8 per cent below, are now behind us,” said Paul Dales, an economist at the Capital Economics UK, an economic research consultancy based in London.

Meanwhile, Dales said he believes goods and staff shortages, including energy crisis, may stall the country’s economic growth and interest rates hike.

“And shortages, including the petrol/energy crisis, may prevent GDP from rising much in the coming months. This weaker activity outlook may prevent the Bank of England from hiking interest rates this year.”

–IANS

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(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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