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UK pandemic recovery outpacing Eurozone as bloc held back by rising Covid cases

·2-min read
Shuts stores in Vienna as Austria enters nationwide lockdown (AFP via Getty Images)
Shuts stores in Vienna as Austria enters nationwide lockdown (AFP via Getty Images)

The UK’s economy is recovering more quickly from the pandemic than eurozone countries as British consumers take rising inflation in their stride, the latest economic figures suggest.

The IHS Markit PMIs for November, a closely-watched score of economic health, shows the UK lately doing notably better than Europe.

The UK score of 57.7 topped the 55.8 across the eurozone – any number above 50 shows growth. The UK’s all-important services sector outpaced manufacturing, which also saw its strongest expansion in three months.

The roll back of pandemic restrictions is restoring consumer confidence with robust rises in business and consumer spending, the report said.

 (AP)
(AP)

Meanwhile Germany, which is contemplating fresh curbs as Covid-19 cases spiral, came in at 52.8.

Business confidence there has also suffered a knock from supply problems and rising prices.

In France, the score was 56.3 as component shortages, long lead times and subdued consumer demand drive a second consecutive monthly fall in manufacturing production.

French PM Jean Castex today tested positive for the virus and is self-isolating.

 (Getty Images)
(Getty Images)

The strength of the UK’s results suggests the Bank of England is increasingly likely to put interest rates up in December.

Chris Williamson at IHS Markit said: “A combination of sustained buoyant business growth, further job market gains and record inflationary pressures gives a green light for interest rates to rise in December.”

Of Europe, Williamson said: “A stronger expansion of business activity in November defied economists’ expectations of a slowdown, but is unlikely to prevent the eurozone from suffering slower growth in the fourth quarter, especially as rising virus cases look set to cause renewed disruptions to the economy in December.”

 (AFP via Getty Images)
(AFP via Getty Images)

Analysts at Investec said: “Given that the survey was completed from November 10 to 19, the report is unlikely to encapsulate the full impact of the tightened social restrictions in countries such as Germany and Austria.

“However, the report did highlight that the surge in Covid-19 infections across the Continent is weighing on business optimism about the outlook, with this indicator falling to a ten-month low.”

The flash figures are preliminary and based on responses from most of the survey participants.

Duncan Brock, group director at CIPS, said: “Another survey record of rising costs for fuel and wage demands led to the highest inflationary pressures since January 1998 as 63% of supply chain managers paid more for their materials.

“Shortages of staff and production stoppages due to a lack of supplies added to frustrations in the manufacturing sector as some machines fell silent.”

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