UK economy bounced back stronger than expected in Q2 before slowdown

Sunday, October 3, 2021

UK business activity grew faster than previously expected during the April-June period, before slowing sharply in recent times from bottlenecks following the closure including a shortage of lorry drivers.

The Office for National Statistics said gross domestic product grew by 5.5 per cent in the second quarter, higher than the ONS 'provisional estimate of 4.8 per cent growth.

The ONS said the data had been revised to accommodate more comprehensive health data, as well as an update of its sources and methods for calculating performance.

Figures gave a more complete picture of Britain's rapid economic recovery from its sterling coronavirus jolt earlier this year, but there are now signs of a loss in momentum from supply bottlenecks and human resources shortages as the world economy regains momentum.

"While the upward revisions to GDP are clearly welcome, Q2 was three months ago, and the recovery appears to have stagnated since," said Ruth Gregory, an economist at Capital Economics.

On Wednesday, BoE governor Andrew Bailey said he believed the economy would return to pre - financial crisis output levels in early 2022 - just one or two months later than the BoE had forecast in August.

Despite the slowdown, the UK's central bank has signalled that it is on course for its first increase in interest rates since the pandemic, assuming inflation will stay above 4%.

Thursday's data revealed that families increased their spending by more than 7% during the April-June period, and dipped into their emergency savings to fund them.