UK economy takes another step toward pre-pandemic level

Jul 9, 2021, 12:46 AM | Updated: 3:41 am

LONDON (AP) — The British economy took another step toward its pre-pandemic level following the latest easing of lockdown restrictions, though the 0.8% growth recorded in May was around half that expected by economists as a microchip shortage hurt car production.

Figures from the Office for National Statistics released on Friday showed the services sector to be largely behind the increase after a raft of hospitality, leisure and arts firms were able to reopen due to the relaxation of restrictions in England on May 17.

Though the British economy has now grown for four months in a row, May’s increase was lower than April’s 2.3% and below market expectations for a 1.5% rise.

“Underlying growth is moderate outside the sectors being unlocked, with supply constraints contributing to the continuing recent stagnation in manufacturing,” said Rory Macqueen, an economist at the National Institute of Economic and Social Research.

Car production had a difficult month, suffering its biggest fall since the U.K. was first hit by lockdown measures last year. A shortage of microchips affected the sector, with output in the manufacture of transport equipment declining by 16.5% for the month.

Despite the run of monthly increases, the British economy remains 3.1% smaller than it was in February 2020, the month before the government first put lockdown measures in place to try to contain the coronavirus.

The U.K. experienced one of the world’s deepest recessions last year, shrinking by around 10%. Restrictions across the U.K. have been lifted over recent months following a monthlong winter lockdown and the rapid rollout of vaccines. The other nations of the U.K. — Scotland, Wales and Northern Ireland — are lifting restrictions slower than England.

The next easing of restrictions in England is due to take place on July 19. This will involve the lifting of all remaining lockdown restrictions that should further boost consumer-facing sectors.

“It’s great to see people back out and about thanks to the success of the vaccine rollout, and to see that reflected in today’s figures for economic growth,” Treasury chief Rishi Sunak said.

However, the recent sharp uptick in new infections has raised concerns that the recovery may stutter during the summer, especially if it means many hundreds of thousands of people have to self-isolate and countless others opt to socialize less while cases are high.


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UK economy takes another step toward pre-pandemic level