UK economic recovery falters

·1-min read

Britain's economic recovery lost momentum during the northern summer despite the widespread lifting of coronavirus restrictions as supply chain issues took their toll, official figures show.

While the Office of National Statistics said the economy eked out some modest growth in August as bars, restaurants and festivals benefited from the first full month without coronavirus restrictions in England, the 0.4 per cent increase was slightly lower than anticipated.

The agency also revised down July's figure from 0.1 per cent growth to a 0.1 per cent decline as a result of weaker data from a number of industries, highlighting the choppy nature of the economic recovery.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said weakness is "seeping through" the figures especially in the construction sector, which has now reported four straight months of negative growth.

The British economy remains 0.8 per cent below its pre-coronavirus pandemic level of February 2020.

The International Monetary Fund forecast on Tuesday that the UK will grow by 6.8 per cent this year, more than any other Group of Seven industrial nation, and by a still-high 5 per cent next. However, the British economy experienced the worst recession of the seven in 2020, contracting by 9.8 per cent output.

With inflation set to hit 4 per cent in the coming months amid rising energy bills, productivity levels low, taxes rising and an uncertain COVID backdrop heading into winter, there are worries that the economy will underperform over coming months.

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