Data out this morning showed that the UK’s economic recovery hit the buffers in August despite the government’s eat out to help out scheme driving a rise in consumer spending. The Office for National Statistics (ONS) said gross domestic product rose by 2.1% in August compared to a revised figure of 6.4% a month earlier, well short of economists’ expectations of 4.6%. The bad news for the economy did not end there. Industrial production numbers were also disappointing with month-on-month data coming in at 0.3%, over 2% lower than expectations, and down 6.4% year-on-year.
The data will be of concern to the Chancellor. Although the UK population as a whole has increased their spending in pubs, restaurants and staycations, the figures come as worries over a second wave of the coronavirus infections spread and the government looks to impose tougher new restrictions on social lives and businesses alike. The second wave of infections, added to the threat of rising unemployment and Brexit uncertainty means that, in the short term at least, the Chancellor will have to stand ready with more support for the economy.
Overall, the UK’s GDP is nearly 22% higher than it was at its lowest ebb back in April, when the economy shrunk 19.5%, however, it remains over 9% below pre-pandemic levels. The ONS said in statement: ‘The level of output has not fully recovered from the record falls seen across March and April 2020, and is still 9.2% below the levels seen in February 2020, before the full impact of the coronavirus (COVID-19) pandemic’.