U.K. Economy Rebounded in 2nd Quarter, Before Delta Variant
Britain’s economy grew 4.8% in the three months to June, compared to the previous quarter, with the vast majority of the country’s lockdown restrictions lifted, the Office for National Statistics said on Thursday.
The economy has returned to growth after a strict winter shutdown, with consumers spending heavily on restaurants, hotels and transportation. Retail sales also rose, as stores deemed non-essential were allowed to reopen, the statistics agency said. At the end of the quarter, the recovery benefited from the euphoric mood that swept the country as England’s national football team progressed into the Euro 2020 tournament, finally reaching the final in July.
The education sector has also been a major contributor to growth, as school attendance rates have increased. Car production weighed on the economy for a second straight quarter as the industry continues to be hampered by a semiconductor shortage. But the demand for cars increased when showrooms reopened, raising the price of used cars instead.
In June, the gross domestic product edged up 1%, the statistics office said. But the overall size of the economy was still 2% smaller than it was before the February 2020 pandemic. The recovery briefly reversed in the first three months of 2021, when the economy collapsed. contracted 1.6%.
Recently, it has been shown that some of this growth momentum has been lost. In mid-July, remaining social distancing restrictions were dropped in England, but the change is unlikely to have added much fuel to the economic recovery as, at the same time, the number of coronavirus cases was rising rapidly. as the Delta variant spread. This has made it possible for most people to work from home rather than the office. Economic indicators that seek to measure the pace of the recovery in real time, using restaurant reservations, credit card spending and store visits, have leveled off.
Earlier this month, the Bank of England predicted that in the third quarter the economy would grow by around 3%, slightly lower than its previous forecast, as people cut back on time and money that ‘they spent on shopping, eating and socializing, either because they were forced to isolate themselves or because they acted more cautiously.
But these factors will only temporarily change the shape of the recovery. By the end of the year, the economy will have regained its pre-pandemic size, the central bank said.
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