UK economy: GDP continues to bounce back as restrictions ease

The UK economy grew by 4.8 per cent from April to June as the country continued to emerge from Covid restrictions, according to the latest official figures.

The results mark a return to growth in the second quarter, after a 1.6 per cent contraction from January to March.

The main driver of growth was consumer spending, which rose by 7.3 per cent over the quarter as Covid restrictions lifted, exceeding expectations.

In April, non-essential retailers reopened across England, as well as gyms, hairdressers and outdoor dining. In May, pubs, restaurants and cafes were allowed to serve customers indoors, while theatres, galleries and cinemas were allowed to open their doors.

The ONS said that the UK’s GDP growth for the quarter was faster than those recorded by the US, France, Germany, and Spain. 

Separate figures show that UK exports to the EU continued to recover in June and are now back to pre-pandemic levels

In June alone, the UK economy grew by 1.0 per cent, driven by sectors including health, advertising, restaurants and bars. This is the fifth month of growth in a row and is stronger than expected.

Output across the rest of the economy, however, was essentially flat. Industrial production fell by 0.7 per cent, primarily due to sharp declines in output in the energy supply and mining and quarrying sectors, while construction output fell by 0.5 per cent.

Overall, the 4.8 per cent growth in Q2 was slightly below the 5 per cent the Bank of England expected, and GDP is still around two per cent below its pre-pandemic peak.

Chancellor Rishi Sunak said the latest figures showed the UK was “bouncing back” from the Covid crisis and “showing strong signs of recovery.”

He said: “I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people.”

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said the latest data confirms a “robust rebound in output” in the second quarter, but warned that business investment remained low, and may limit UK productivity.

He said: “Growth in the second quarter may be the high point for the UK economy with economic activity likely to moderate in the third quarter as staff shortages, supply chain disruption and consumer caution to spend limits any gains from the lifting of restrictions in July.

He warned policymakers to guard against “complacency” over the underlying strength of the recovery and urged for a “comprehensive rebuild strategy to turbocharge growth post Covid”.