Rolling coverage of the latest economic and financial news, including the UK GDP report for July
Breaking: UK GDP jumped by 6.6% in JulyCar manufacturing, schools, pubs and hairdressers lifted growthStrong growth, but slower than in JuneEconomy still 7.6% smaller than in previous quarterJuly’s GDP 11.7% lower than February
Here’s some early reaction to this morning’s UK growth report.
Tej Parikh, Chief Economist at the Institute of Directors, fears the economy will soon hit ‘speed bumps’:
“The economy continued its rebound in July, but the hard part is still to come.
“With the lockdown lifting, production has picked up quickly. Businesses have also been adapting at pace, launching new products and shifting their operations online.
The UK economy is currently in a period of temporary calm, with activity buoyed by the government’s emergency support measures and the unwinding of pent-up customer demand as more parts of the economy reopened.
“However, with many firms continuing to face an unprecedented cash crisis and unemployment likely to surge as the support schemes wind down, there remains little prospect of a sustained resurgence unless substantial action is taken.
“Attention now turns to the sustainability of the upturn. August’s GDP print will show the impact of the popular ‘Eat Out to Help Out’ scheme. We already know consumer spending in August exceeded last year’s level for the first month since lockdown began, but with social distancing still in place some sectors are struggling to get back on their feet.
“We are far from out of the woods yet. Covid-19 cases are on the up again, the government is re-imposing restrictions on social gatherings and this, combined with the end of the furlough scheme next month, leaves the outlook uncertain. Deteriorating relations with the EU make a no-deal Brexit in January more likely, adding to the UK’s economic challenges and to downward pressure on the pound.”
“July’s activity was buoyed by the steady re-opening of businesses after the initial national lockdown, partial resumption of travel and increasing demand for staycation holidays around the UK. Expect more of the same in August owing to the boost from the Eat Out to Help Out scheme.
“The hospitality sector saw a big boost in July, however activity remains well below pre-COVID levels.
Onto services…and accommodation and food suffered the worst slump over the summer, despite growing solidly in July.
Food and beverage service activities shrank by 60.1% in May-July, due to the closure of bars and restaurants.