UK economy grows 2.1 per cent in August

LONDON (AFP) – Britain’s economy expanded a weaker-than-expected 2.1 per cent in August and remained far down on pre-pandemic levels, official data showed yesterday.

Despite a fourth consecutive monthly increase, gross domestic product (GDP) remained 9.2 per cent below the level in February, the Office for National Statistics said in a statement.

This tallied with Bank of England governor Andrew Bailey, who on Thursday said United Kingdom (UK) economic output in the third quarter, or July-September period, was between seven and 10 per cent below pre-pandemic levels.

Analysts had forecast a much stronger reading in August at 4.6 per cent, while Bailey has warned over an unprecedented level of uncertainty and fresh risks to the downside.

“As the UK once again tightens the screw against the virus, with millions of Britons being urged to work from home and pubs and restaurants again being forced to close in some areas, today’s GDP data bodes ill,” said head of trading at Infinox Ulas Akincilar.

“If this was all the growth the economy could muster during the peak of August’s optimism, what now as Britons steel themselves for a grim winter of surging virus cases and job losses as the furlough support scheme ends?”

From next month, the government waters down its jobs support scheme that has helped keep millions of people in employment during the pandemic.

Analysts said this will lead to a surge in unemployment, with the hospitality sector particularly affected.

British chain Greene King this week already said it will cut 800 jobs, after new coronavirus restrictions were imposed on the sector to counter rising infections.

Britain’s hospitality sector as a whole will shed more than 560,000 jobs this year as the coronavirus pandemic kills trade in hotels and restaurants, its boss warned on Tuesday.

Britain has suffered the worst death toll in Europe from the virus outbreak, with more than 42,000 confirmed deaths.

The UK economy shrank by a fifth in the second quarter which coincided with Britain in a massive lockdown.