The pace of the UK’s economic recovery from the Covid-19 pandemic has slowed considerably and is far below what experts had hoped for, new figures show.
Gross National Product (GDP) was up by 2.1% during August, according to data from the Office for National Statistics (ONS).
It was the fourth consecutive month of growth, after the economy took a serious hit during the depths of the Covid-19 pandemic.
But it is less than half of what experts had expected, and a major slowdown since July.
Analysts expected that GDP would increase by 4.6%, according to a consensus taken by Pantheon Macroeconomics.
In July, GDP was up by 6.4%, and in June it rose by 9.1%, according to ONS data.
The Government invested hundreds of millions of pounds to get the economy back on its feet in August, including promising to pay for half a restaurant bill during parts of the month.
It was largely this scheme, and other government initiatives, that encouraged growth across the month, said Suren Thiru, head of economics at the British Chamber of Commerce.
The accommodation and food service sectors contributed 1.25 percentage points of August’s growth in GDP.
“The increase in activity in August largely reflects a temporary boost from the economy reopening and government stimulus, including the Eat Out to Help Out scheme, rather than proof of a sustained ‘V’-shaped recovery,” he said.
It is now vital that the Government is ready to help companies through what will prove to be a “difficult winter,” Mr Thiru added.
This will need measures “beyond the Chancellor’s recent interventions”.
Trades Union Congress general secretary Frances O’Grady added: “We still lack the full national recovery plan needed for a fast and sustained recovery.
“TUC research has found that over a million jobs can be created in the next two years by fast-tracking investment in green transport and infrastructure.”
Labour shadow chancellor Anneliese Dodds said: “If the Chancellor doesn’t act, we risk a devastating spike in unemployment that will choke off the recovery as we head into winter.”
Business minister Nadhim Zahawi said 2020 “is going to be a difficult year”.
He told BBC Breakfast: “This is a really tough year economically.
“The Chancellor has put around £190 billion into the economy to protect jobs.
“The direction of travel is still positive, it’s still over 2% growth, but nevertheless many, many businesses, whether it’s hospitality and retail or aviation, are struggling with coronavirus as are many other nations around the world.”
The data shows that GDP rose by 8% in the three months to the end of August.
It marks a major turnaround from the depths of lockdown after GDP notched up a record 19.5% drop in April.
🗣️ @Suren_Thiru: “The looming triple threat of surging unemployment, further restrictions and a disorderly end to the transition period means the recent rally in economic output is likely to be short-lived."
— BCC (@britishchambers) October 9, 2020
However, the measure is still 9.2% below where it was in February this year.
ONS deputy national statistician for economic statistics Jonathan Athow said: “The economy continued to recover in August but by less than in recent months.
“There was strong growth in restaurants and accommodation due to the easing of lockdown rules, the Eat Out To Help Out scheme, and people choosing summer ‘staycations’.
He added: “However, many other parts of the service sector recorded muted growth.
“Construction also continued its recovery, with a significant boost from housebuilding.
“There was limited growth in manufacturing, which remains down on its pre-pandemic level, with car and aircraft production still much lower than the start of the year.”