UK economy grows for a fifth month as diners rush to cafes and bars
Official data shows 1% growth in June after further easing of lockdown restrictions
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Last modified on Thu 12 Aug 2021 03.41 EDT
Britain’s economy grew for a fifth month in June as the reopening of indoor hospitality and visits by patients to their GPs helped boost national output by 1%, official data has shown.
Despite the government’s decision to delay the full lifting of restriction by four weeks to 19 July, the Office for National Statistics said growth in June was almost twice as rapid as the 0.6% in May.
Gross domestic product remained 2.2% below the level reached before the Covid-19 pandemic in February 2020, and some analysts said they expected the pace of recovery to have slowed in July amid rising infection rates.
Growth in June was the result of a 1.5% expansion of the service sector, helped by a rise of just over 10% for restaurants, cafes and bars. Services account for about 80% of GDP.
The ONS said there had also been a 4.5% increase in health services – which accounted for half the monthly rise in GDP. Samuel Tombs, a UK economist at Pantheon Macro, said he expected GDP to increase by just 0.2% in July.
Data for the second quarter of 2020 showed the economy was 4.8% bigger than it was between January and March, when the economy was constrained by curbs on activity and GDP contracted by 1.6%.
Between April and June, the UK grew at more than double the rate of the 2% seen in the eurozone and faster than the US, which grew at a quarterly rate of just over 1.5%.
Ruth Gregory, UK analyst at Capital Economics said the main driver of growth in the second quarter had been a 7.3% jump in consumer spending, but she added the economy had also been boosted by an increase of 6.1% in government spending and 2.4% increase in investment.
The chancellor, Rishi Sunak said: “Today’s figures show that our economy is on the mend showing strong signs of recovery, thanks to our Plan for Jobs and successful vaccine programme.
“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. With the fastest quarterly growth rate among the G7 economies, we have exceeded expectations, and I’m pleased to see the UK bouncing back.”
The ONS said on a quarterly basis, the economy was 4.4% smaller than in the final three months of 2019. The US has already made up the ground lost during the pandemic.
Jonathan Athow, the deputy national statistician for economic statistics at the ONS, said of the June data: “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.
“The often-erratic pharmaceutical industry saw a large monthly fall while oil and gas production again fell as North Sea maintenance continued. Energy usage also dropped as summer finally arrived across the UK.”
Separate ONS figures for trade showed exports to the EU were above pre-Brexit levels after a small rise from £14.1bn to £14.3bn in June.
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