United Kingdom economy around a quarter smaller than before pandemic

Marco Green
July 14, 2020

"The pick-up in output in May is more likely to reflect the partial release of pent-up demand as restrictions began to loosen, rather than evidence of a genuine recovery", said Suren Thiru, head of economics at the British Chambers of Commerce.

The Office for National Statistics (ONS) reported a 1.8% improvement in United Kingdom output during May compared to the previous month - worse than the 5% spurt economists had expected.

Unemployment is expected to rise sharply over the coming months as the government withdraws some of its emergency support.

With thousands of companies forced to close temporarily to limit the spread of the virus, Britain's dominant services sector - which makes up about 80% of the economy - grew by just 0.9% on the month, dragged down by falling levels of activity in arts, entertainment and recreation, as well as at estate agents and IT firms.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website.

The ONS also published industrial and manufacturing production data, which showed manufacturing output arrived at +8.4% month on month in May against expectations of -20.9% and the -24.4% reported in April, while total industrial output came in at +6.0% compared with -20.2% in April and a forecast of +6.0%.

"Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck".

Responding to Tuesday's revelation, Chancellor Rishi Sunak said "Today's figures underline the scale of the challenge we face".

"I know people are anxious about the security of their jobs and incomes", he said.

That's why I set out our Plan for Jobs last week, following the PM's new deal for Britain, to protect, support and create jobs as we safely reopen our economy.

Jonathan Athow, deputy national statistician at the ONS, said of the performance: "Manufacturing and house-building showed signs of recovery as some businesses saw staff return to work". In June, shops selling items considered nonessential such as books and shoes reopened, followed in early July by the reopening of much of the hospitality sector, including pubs and restaurants.

The figures also showed manufacturing activity in May was 22.3 percent lower than in February and construction a mammoth 38.8 percent behind.

Experts believe June and July's GDP data should show a bigger bounce back. "It is likely to take years, not months, to fix the damage to the economy done by Covid-19".

Other reports by Click Lancashire

Discuss This Article