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UK economy bouncing back slowly as lockdown restrictions ease

The UK economy grew by almost 5 per cent in the second quarter of this year, new figures have revealed.

Data released today by the Office for National Statistics (ONS) shows a 4.8% rise in gross domestic product (GDP) between April and June, coinciding with the easing of lockdown restrictions.

Along with the reopening of bars and restaurants, the ONS said another factor contributing to the national income growth was the increase in the number of people attending their GP surgeries.

According to the official statistics body, the number of people visiting their doctor for non-Covid complaints rose, increasing the consumption of health services by 5.1% in the second quarter.

Deputy national statistician for economic statistics Jonathan Athow said: “The UK economy has continued to rebound strongly, with hospitality benefiting from the first full month of indoor dining, while spending on advertising was boosted by the reopening of many services.

“Health services also showed growth, with many more people visiting their GP.

“GDP is still around two percentage points below its pre-pandemic peak.”

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Economists at Pantheon Macroeconomics had expected GDP to grow by 0.6% in June, and 4.7% across the quarter.

The Bank of England had predicted growth of 5% across the quarter.

However, the surge of the Covid-19 Delta variant and the boom in the number of people self-isolating undermined some of this growth.

Nevertheless, the data marks a major improvement from the first months of the year.

In the first quarter the economy contracted by 1.6% as it battled with prolonged lockdowns.

That data covered the period to the end of March, so did not include the reopening of outdoor hospitality in April and indoor hospitality a month later.

Chancellor Rishi Sunak said: “I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people.”

But the Liberal Democrats and the Trades Union Congress warned against thinking that support could be withdrawn from the economy because of higher GDP.

TUC general secretary Frances O’Grady said: “The economy is still fragile, with nearly two million people still on furlough.

“A premature end to furlough will needlessly cost jobs and harm our economic recovery.”

Liberal Democrat Treasury spokeswoman Christine Jardine said: “These figures shouldn’t lull us into thinking that all our problems are solved. We still face potentially massive obstacles if the Government goes ahead with ending the furlough scheme and the Universal Credit uplift at the end of next month.

“Hard-pressed families and struggling businesses need more reassurance than improving GDP figures – they need support extended into next year.”

The ONS also reported that the UK’s trade deficit, excluding precious metals, rose by £3.6 billion to £5.2 billion in the second quarter of the year.

In June exports to non-EU countries fell by 5.6%, mainly due to drops in sales of pharmaceuticals and cars to countries outside Europe.

Exports to EU countries rose 1.2% in June, the statisticians said.

By Hannah Rodger

Source: Herald Scotland

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UK economy contracted by 1.6% as people saved at record levels, figures show

UK economy suffered a bigger hit than first thought between January and March as the coronavirus lockdown took its toll and households saved at record levels, according to official figures.

The Office for National Statistics (ONS) said gross domestic product (GDP) – a measure of the size of the economy – contracted by 1.6% in the first quarter, compared with the previous estimate of 1.5%.

This means GDP was 8.8% below its pre-pandemic levels at the start of the year, against the 8.7% initial estimate.

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The ONS said households slashed their spending and instead piled cash into savings, with the household saving ratio increasing to 19.9%, compared with 16.1% in the previous three months.

It is the second highest figure on record, beaten only by the 25.9% seen in the second quarter of 2020.

Jonathan Athow, deputy national statistician at the ONS, said: “Today’s updated GDP figures show the same picture as our earlier estimate, with schools, hospitality and retail all hit by the reimposition of the lockdown in January and February, with some recovery in March.

“With many services unavailable, households again saved at record levels with only last spring seeing more saved.”

Source: iTV

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UK economy accelerates as tourism and hospitality emerge from lockdown

The UK economy accelerated in May as tourism and recreation firms reopened, but the delay in ending Covid-19 restrictions is putting hospitality firms at risk, research shows.

Eleven out of 14 UK sectors reported faster growth in output month on month in May, up from nine in April, according to the Lloyds Bank UK Recovery Tracker, as the UK moved further out of lockdown.

The tracker found that the UK tourism and recreation sector recorded the sharpest rise in output growth as British hotels, pubs and restaurants benefited from pent-up consumer demand.

Firms took on more staff to handle rising demand. All 14 sectors reported jobs growth in May, led by manufacturing, while the tourism and recreation sector added jobs for the first time since January 2020.

Jeavon Lolay, the head of economics and market insight for commercial banking at Lloyds Bank, said sectors that had been acutely affected by coronavirus restrictions were now outpacing those that operated more freely during lockdown.

“Whether the four-week delay to further easing of restrictions will impact this trend is unclear. But while the delay is understandably disappointing for many businesses, there’s no denying that the economy is now on a much sounder footing,” Lolay said.

The survey also showed that companies across the economy raised their prices in May, led by chemicals and metals and mining producers.

“While UK inflation jumped higher than expected in May and stronger demand saw more businesses pass on rising costs to their customers, it’s arguably still too soon to worry about inflation spiralling out of control,” Lolay said.

The fast-food chain McDonald’s announced expansion plans on Sunday and will recruit 20,000 workers over the next 12 months as it opens 50 new restaurants in the UK and Ireland.

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But the Covid-19 restrictions are continuing to hurt the hospitality sector, particularly the night-time economy.

About 25,000 licensed premises were still shut at the end of May 2021, according to research from CGA and AlixPartners, which warned that thousands more clubs, restaurants, pubs and bars are at risk from the delay to ending lockdown.

CGA and AlixPartners found that more than three-quarters of Britain’s licensed sites were trading by the end of last month, up from about a third in April, thanks to the return of inside service.

However, while more than nine in 10 food pubs, high street pubs and casual dining restaurants are open, sectors that rely on late-night trading are still in jeopardy of failure, the report found.

“Many operators will have reopened in anticipation of restrictions falling away on 21 June, and likely forecast and accepted suppressed trade for the period up to that point,” said Graeme Smith, the managing director of AlixPartners.

“While far from ideal, knowing that ‘freedom day’ was on the horizon meant operators could battle through this challenging time, perhaps welcoming team members back to the business in anticipation and getting operations up to speed. A further delay of four weeks is a devastating blow, creating significant uncertainty and further financial strain.”

Michael Kill, the chief executive of the Night Time Industries Association, has urged the government to lift restrictions on 5 July – at the two-week review point set when the restrictions were extended. He said the industry was “on the verge of breaking”.

By Graeme Wearden

Source: The Guardian

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