Britain’s economy rebounded by a record 15.5 per cent between July and September, reflecting the relaxation of lockdown measures and increased consumer activity over the summer. This is the largest quarterly growth in the UK economy the Office for National Statistics has reported since records began in 1955. Services, manufacturing, production and construction saw big uplifts across the board in Q3, but all remain below their Q4 levels in 2019, reflecting that the economy as a whole has not recovered to its pre-Covid levels: it is still 8.2 per cent smaller than it was at the start of the year.
But with this good news comes a major caveat: while the economic bounce back in the summer months is impressive, the conditions under which it grew have changed dramatically in recent months. Worryingly, growth had already started to slow in August, when the economy was most open and policy was put in place to subsidise people to have meals out and stimulate the economy. This trend was confirmed by today’s GDP update for September, which saw the economy grow by a measly 1.1 per cent. The loss in momentum has hit all sectors, indicating that even under a more economically liberal scenario, the UK was going to face some struggle getting its economy back to where it was in February this year.
But we are no longer pushing to open the economy. Opposite policies have been implemented, including circuit-breakers in Scotland, fire-breakers in Wales and a second national lockdown in England. Forecasts now show the UK will experience another economic contraction – albeit smaller than the last – making the path to recovery an even more difficult, drawn-out one. Good news about the Pfizer-BioNtech vaccine boosted economic confidence this week. This was reflected in the markets and, depending on how it continues to advance, this confidence will hopefully be reflected more widely as well. But even in the best case scenario, there is no doubt that we will be living the ramifications of a locked-down society for years to come.
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