BRITAIN's gross domestic product rose by 2.1 per cent in August, official data shows, much lesser than expected.
Finance minister Rishi Sunak will announce later on Friday(9) a plan to support jobs in businesses that may be ordered to close to slow a resurgence of Covid-19 infections.
"The sharp slowdown in growth indicates that the recovery may be running out of steam, with output still well below pre-crisis levels," Suren Thiru, head of economics at the British Chambers of Commerce said.
"The increase in activity in August largely reflects a temporary boost from the economy reopening and government stimulus, including the Eat Out to Help Out Scheme, rather than proof of a sustained 'V'-shaped recovery."
More than half of the economy's growth in August came from accommodation and food, where output surged by 71.4 per cent.
Services sector grew by 2.4 per cent from July, half the pace expected by economists. Growth in the smaller manufacturing and construction sectors also fell short of forecasts.
Despite a fourth consecutive monthly increase, gross domestic product remained 9.2 per cent below the level in February, the Office for National Statistics said in a statement.
This tallied with Bank of England governor Andrew Bailey, who on Thursday(8) said UK economic output in the third quarter, or July-September period, was between seven and ten percent below pre-pandemic levels.
With the government's main furlough scheme closing at the end of the month and health restrictions tightening by the day, swathes of workers in hospitality, arts and other sectors face unemployment.
Hence expectations are high for Sunak's new plan which is likely to support jobs and economy.
There are around 2.5 million jobs in the hospitality sector. The sector as a whole will shed more than 560,000 jobs this year due to the pandemic, it is expected.
Kate Nicholls, head of the UK Hospitality trade body, said new Covid-19 restrictions introduced in September had weighed on the hospitality sector again.
Pubs across England, Wales and Scotland were forced to enact early closing times last month. Scotland's government has since ordered a 16-day closure of pubs in the country's two biggest cities starting on Friday.
Sunak's new jobs plan would subsidise two thirds of the wages of workers in pubs, restaurants and other businesses forced to close, the Times newspaper reported.
"Today's figures show our economy has grown for 4 consecutive months, but I know that many people are worried about the coming winter months," Sunak said in a statement.
"Throughout this crisis, my single-focus has been jobs – protecting as many jobs as possible, and providing support for people to find other opportunities where this isn't possible. This goal remains unchanged."
The opposition Labour Party said the government had lost control of the virus, harming companies in the process.
"Businesses, which have stepped up to help our country and economy through this pandemic, will face a weekend of uncertainty about whether or not they will be able to stay open," Labour leader Keir Starmer wrote in the Daily Telegraph.
Anti-Racism protesters come out in support of refugees outside the Cladhan Hotel on September 13, 2025 in Falkirk, Scotland. (Photo by Jeff J Mitchell/Getty Images)
