Despite an early summer bounce back Britain’s GDP grew more slowly than expected in September and has not recovered from the steep falls in March and April following the onslaught of the CCP (Chinese Communist Party) virus pandemic.
The Office for National Statistics (ONS) in monthly estimated figures published on Thursday showed that September’s growth was just up 1.1 percent over August against the 1.5 percent predicted by a Reuters poll of analysts.
The ONS also said the economy was 8.2 percent below its February level before the pandemic’s widespread impact on the economy.
The slowdown in Thursday’s official data cemented expectations that the economy will shrink again as 2020 ends, with uncertainty about the Dec. 31 deadline for a post-Brexit European Union trade deal adding to the virus drag.
Since peak growth in June, the ONS said, there had been a “loss of momentum,” over the following three months. Despite the growth in some sectors in September, including 2.9 percent in construction, it said the “main sectors” of GDP had all slowed.
Citing results from its Business Impact of Coronavirus (COVID-19) Survey (BICS) in a snapshot covering Oct. 5 to Oct. 18 the ONS also said almost half of all industries had experienced a fall in turnover.
The biggest losers in the October snapshot were accommodation and food services where 72 percent experienced falls in turnover, the arts entertainment and recreation sector where 69 percent saw falls, and private and higher education at 57 percent.
Britain’s economy is trailing that of other wealthy nations.
With GDP almost 10 [percent] smaller than at the end of 2019 falls are twice as big as those of Italy, Germany, and France, and nearly three times the size of the U.S. drop, the ONS said.
The economy is being propped up by more than £200 billion ($ 260 billion) of emergency spending and tax cuts ordered by finance minister Rishi Sunak and the Bank of England’s almost £900 billion ($1,184 billion) bond-buying programme.
“Today’s figures show that our economy was recovering over the summer, but started to slow going into autumn,” Sunak said. “The steps we’ve had to take since to halt the spread of the virus mean growth has likely slowed further since then.”
Economy and social policy experts have warned that recovery from the virus-related economic slump will be slow.
“Britain’s COVID crisis, and its recovery phase, will take far longer than many people first thought,” said James Smith, research director of the Resolution Foundation think-tank, and urged Sunak not to start reversing his spending surge quickly.
Vaccine Trials ‘Encouraging’
Bank of England Governor Andrew Bailey meanwhile said there was still a “huge gap” in the economy but news of a potentially effective vaccine would help lift the uncertainty.
“It’s encouraging for individuals, it’s encouraging for businesses and it’s encouraging for the economy,” he told a Financial Times event on Thursday.
Bailey’s comments follow UK Prime Minister Boris Johnson saying on Monday that despite several more to overcome, a significant hurdle has been cleared on the path to a vaccine for COVID-19.
His comments came after the latest results released by New York-based Pfizer and German biotechnology company BioNTech showed a vaccine candidate was strongly effective in a large phase 3 study.
Since last week England has been under a second lockdown amid the ongoing pandemic as positive cases rose across the country.
Under modified restrictions compared to the first lockdown in the Spring, however, along with schools and higher education some sectors including manufacturing and construction can remain open.
Reuters and Lily Zhou contributed to this report.