UK GDP Bounce-Back Faltered in July Amid ‘Pingdemic,’ Shortages

A general view shows shipping containers at the Port of Southampton, on the south coast of England, on March 5, 2021. (Adrian Dennis/AFP via Getty Images)

The UK’s economic bounce-back faltered in July despite pandemic restrictions being lifted, as businesses were caught by the “pingdemic” and materials shortages.

Official statistics from the Office for National Statistics (ONS) said that gross domestic product (GDP) rose by 0.1 percent in the month of July. In June, that figure was 1 percent.

The UK economy has been picking up but remains 2.1 percent below its pre-pandemic peak.

“After many months during which the economy grew strongly, making up much of the lost ground from the pandemic, there was little growth overall in July,” said ONS deputy national statistician for economic statistics Jonathan Athow.

“Oil and gas provided the strongest boost, having partially bounced back after summer maintenance. Car production also continued to recover from recent component shortages.”

He added: “The service sector saw no growth overall with growth in IT, financial services, and outdoor events—which could operate more fully in July—offsetting large falls in retail and law firms.”

“Meanwhile, rising costs and shortages of raw materials pegged back the construction sector again.”

Analysts also cite the tsunami of workers mandated to self-isolate during an uptick in CCP (Chinese Communist Party) virus cases—the so-called “pingdemic,” named after the alert sound of the phone app used to track people’s proximity.

Julian Jessop, Economics Fellow at free-market think tank the Institute of Economic Affairs, said that the latest data suggested that the recovery stalled in July.

“The stagnation in July partly reflects renewed consumer caution over Covid (output in consumer-facing services fell by 0.3 percent),” he said in a statement. “Indeed, the initial impact of ‘Freedom Day’ may even have been negative. But this at least should be temporary, and the August retail surveys are mostly reassuring.”

“There are also many problems on the supply side. Some of these will be temporary too—notably the “pingdemic” and the tying up of workers on furlough. Others are global and likely to be longer lasting, though markets will be able to fix these over time.”

Jessops said economies in Europe, and the United States, are facing similar problems. “Unfortunately, they do not publish monthly GDP data. But on other indicators, such as retail sales, car production, and activity in the construction sector, they were doing at least as badly.”

The ONS also reported on the UK’s trade figures.

The trade deficit—the difference between imports and exports—widened by £1.5 billion to £4.9 billion in July, it said.

Imports of goods fell from EU countries, driven especially by clothing and footwear imports, the ONS said.

Ana Boata, head of macroeconomic research at trade credit insurer Euler Hermes, said: “UK exporters are losing their competitive advantage.

“Since its peak in 2017, financial services—the UK’s biggest exporting sector—has steadily lost its market share.

“The UK is the only one of the 10 biggest countries to see this happen, with Brexit exacerbating the decline.”

PA contributed to this report