THE British economy continued to recover in July, expanding by 6.6 per cent, a slower pace of growth than in June when the country emerged from its virus lockdown, official data showed on Friday (11).
Gross domestic product had surged by 8.7 per cent in June and by 2.4 per cent in May, following a record contraction of 20 per cent in April, the Office for National Statistics said in a statement.
"While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic," said ONS director of economic statistics, Darren Morgan.
He said that, in July, "education grew strongly, as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements".
Morgan added that car sales exceeded pre-crisis levels for the first time as showrooms reopened.
"All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover," he said.
"However, both production and construction remain well below previous levels."
Chancellor Rishi Sunak said: "While today’s figures are welcome, I know that many people are rightly worried about the coming months or have already had their job or incomes affected. That’s why supporting jobs is our first priority and why we’ve outlined a comprehensive Plan for Jobs to ensure nobody is left without hope or opportunity.
"We’re helping people return to work with a £1,000 retention bonus for jobs brought back from furlough. And we are creating new roles for young people with our Kickstart scheme, introducing incentives for training and apprenticeships, and supporting and protecting jobs in the tourism and hospitality sectors through our VAT cut and last month’s Eat Out to Help Out scheme."
The economy has recovered about half of its lost output but is still 11.7 per cent smaller than its level in February, before the pandemic hit Britain.
Thomas Pugh, an economist with Capital Economics, said the data suggested British GDP would show record-breaking growth in the third quarter after its unprecedented collapse in the April-June period.
"However, July was probably the last of the big step-ups in activity and a full recovery probably won't be achieved until early 2022," he said.
In response, the Bank of England was likely to ramp up its bond-buying stimulus programme by a third, or £250 billion, added Pugh.
BREXIT RISKS BACK
Hopes for a swift rebound have faded as businesses struggle to cope with social distancing rules and many people remain reluctant to travel on public transport or go to crowded places.
Tensions between London and Brussels over a post-Brexit trade deal are also mounting.
Furthermore, unemployment is expected to rise sharply because Sunak has ruled out extending his coronavirus job retention scheme which is due to expire at the end of October.
Parliament's Treasury Committee on Friday urged Sunak to "carefully consider" a targeted extension of the scheme and other support measures.
The pound fell slightly against the dollar as Friday's data showed output in Britain's dominant services sector was a bit weaker than expected, growing by 6.1 per cent in July against expectations for growth of 7 per cent.
This included a 141 per cent jump in accommodation and food as lockdown measures eased, but that sector's output was still 60 per cent lower than its February level.
Growth in the much smaller manufacturing and construction sectors exceeded forecasts.
Complicating the outlook, Brexit risks have resurfaced.
The European Union told Britain on Thursday it should scrap a plan to breach their divorce treaty, but Prime Minister Boris Johnson's government refused and pressed ahead with a draft law that could sink four years of talks.
"We are far from out of the woods yet," Tom Stevenson, investment director (Personal Investing) at Fidelity International, said, pointing to rising Covid-19 infections, new curbs on social gatherings and the end of the furlough scheme.
"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."
Bags of rubbish and bins overflow on the pavement in the Sparkbrook area on June 02, 2025 in Birmingham, England. (Photo by Christopher Furlong/Getty Images)
