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Economy out of recession but growth slowing down

The UK economy has come out of the recession caused by the original Coronavirus lockdown, but growth is showing signs of slowing down, according to the latest GDP figures from the Office for National Statistics.

Growth of 15.5% in July to September was the biggest on record, following a six-month slump caused by lockdown.

However, growth was weaker in September than in the preceding months, while the country’s economy remains 8.2% smaller than before the virus struck.

The economy had shrunk in the first three months of the year and then contracted by a record 19.8% in the April-to-June period. Two consecutive three-month periods of contraction are generally defined as a recession.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “While there was confirmation that the UK exited recession, the historically strong headline figure masks a loss of momentum through the quarter, as the temporary boost from the release of pent-up demand as the economy reopened gradually faded. With output still well short of pre-crisis levels there was little sign of a ‘V’-shaped recovery even before the latest lockdown.   

“Although less restrictive than the first, a second lockdown means that output is likely to contract in the fourth quarter. With much of the economy now in a weaker position to withstand periods of extended closure than at the start of the pandemic, the damage to economic activity in the near term may be significant, particularly if restrictions extend beyond December 2.   

“Until a vaccine is rolled out, mass testing remains crucial to getting the economy moving and avoiding further damaging lockdowns. With many firms facing a significant cash crisis, increased grant support for those impacted by restrictions is vital to helping the UK economy weather a difficult winter ahead.” 

 

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