UK economy almost at a standstill before new Covid restrictions hit, ONS says

  • 12/10/2020
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Britain’s economic recovery from the first wave of Covid-19 had almost come to a standstill as fresh restrictions affecting the hospitality sector were imposed in the autumn, according to the latest official data. Figures from the Office for National Statistics showed that national output – or gross domestic product – rose by 0.4% in October. Although it was the sixth successive monthly increase since May, the ONS said activity remained almost 8% below its pre-crisis level. The economy is expected to contract in November as a result of the four-week lockdown in England but the ONS said there were already signs of the tightening of restrictions having an impact on the service sector in October. A breakdown of GDP into its three main sectors showed production rising by 1.3% in October, construction up by 1% but services – which account for around 80% of GDP – increasing by just 0.2%. Within services, the ONS said tougher social distancing rules, which included a firebreak in Wales and the tiering system in England, meant output of accommodation and food retailing fell by more than 14%. ONS figures show a marked deceleration in growth since the summer. The economy expanded by 9.1% in June, 6.3% in July, 2.2% in August and 1.1% in September, before a further slowdown in October. The Office for Budget Responsibility – the body responsible for the government’s economic forecasts – said last month it expected GDP to fall by more than 11% this year, the biggest decline in more than 300 years. With some analysts predicting November could record an 8% contraction in the economy, the chancellor, Rishi Sunak, vowed to keep supporting jobs and growth. “Our unprecedented package of support has protected more than 12m jobs and millions of businesses across the UK – and we have provided the NHS with all the resources needed to halt the spread of the virus including £6bn to ensure the UK was the first country in the world to roll out a vaccine,” the chancellor said. “I know people are worried about the winter months, but we will continue to support people through our ‘Plan for Jobs’ to ensure nobody is left without hope or opportunity.” Jonathan Athow, ONS deputy national statistician for economic statistics, said: “The UK economy has now grown for six months running but still remains around 8% below its pre-pandemic peak. “Public services output increased, while car manufacturing continued to recover and retail again grew strongly. However, the reintroduction of some restrictions saw services growth hit, with large falls in hospitality, meaning the economy overall grew only modestly.”

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