Tuesday, November 30

UK bounces back from recession


 

 

The UK economy grew by 15.5% between July and September, the Office for National Statistics (ONS) said on Thursday, showing a partial recovery before the second wave of COVID-19 hit.

The ONS said on Thursday its initial estimate of GDP growth in the third quarter was 15.5%. Economists had expected third quarter GDP to grow by 15.8%.

An initial estimate of third quarter GDP showed the UK made progress in reversing the historic economic slump caused by COVID-19 before the second wave struck.

The UK economy shrank by a fifth in the second quarter of 2020. A strict lockdown in place for most of the period led to collapsing economic activity across the country.

Restrictions were largely lifted by the end of the second quarter and the government encouraged people back to work and into restaurants from summer onwards. That helped lead a bounce back in economic activity.

While the data is encouraging, Britain’s economy still remains almost 10% below pre-pandemic levels and experts said the ongoing COVID-19 second wave was likely to stall the recovery.

With the increase in restrictions seen through October, and the partial lockdown of the economy into November, the damage seen in Q4 is likely to eat into the recovery seen in Q3, which means the numbers this week are likely to be seen through the prism of being in the rear-view mirror, and old news, said Michael Hewson, chief market analyst at CMC Markets.