Britain's economy saw faster growth in June as lockdown rules eased: Data
The United Kingdom's gross domestic product (GDP) grew by an entire percentage point, which is 0.8 per cent more than what was predicted by economists, in June when the coronavirus disease (Covid-19)-necessitated lockdown was eased. The information was provided on Thursday by Britain's office for national statistics noting that the economic growth for the country is now at 4.8 per cent for the second quarter, which is close to the 5 per cent prediction made by the Bank of England last week.
The latest statistics imply that the UK economy is only 2.2 per cent smaller than before the series of Covid-19 lockdowns and related regulations came into effect. This, in turn, implies a sharp recovery from the worst recession that the country faced in three centuries. The Bank of England expects the lost output to return by the end of this year.
“Today’s figures show that our economy is on the mend, showing strong signs of recovery,” news agency Bloomberg quoted the chancellor of the exchequer Rishi Sunak as saying. “I know there are still challenges to overcome, but I feel confident in the strength of the UK economy.”
What's behind UK's economic growth in June?
According to statisticians quoted by the news agency, UK's health services and a resurgence in hospitality were the key driving factors behind the economic growth in June. Along with these sectors, education also surged during the quarter when schools reopened after the lockdowns rules were used.
Since UK residents made frequent visits to general physicians, the health and social work sector became the largest contributor to the June growth, said Hande Kucuk, the deputy director of the National Institute of Economic & Social Research. “We expect growth to slow in the third quarter but still remain high by historical standards,” he said.
Another reason behind the strong economic recovery is the massive financial support provided by the government, for example by paying the bulk of private-sector wages.
Economic rebound faces challenge
However, total UK output remains 4.4 per cent lower compared with before the Covid-19 pandemic, or the final quarter of 2019. The GDP fell by 1.6 per cent in the first three months of the year, the office for national statistics noted, indicating that the economic rebound has plenty of challenges up ahead.
The jobs protection programme sponsored by the government is set to end this September, while global supply chain bottlenecks still persist. Analysts also warn that strong price rises could force central banks to hike interest rates sooner than expected, hindering the recovery.