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Is this a relief or just a sign that the worst is yet to come?
Official figures have been revised to show that GDP shrank by just under 9.7% in 2020, slightly less than the fall recorded in 1921 – meaning last year was the worst contraction for 99 years.
The contraction, caused by the impact of the coronavirus pandemic crushing economic activity, has been described as the worst since the Great Frost of 1709.
With inflation pressures also building – as oil and natural gas prices climb – at the same time, Bank of England governor Andrew Bailey has warned the recovery is facing “hard yards” ahead. But the second quarter was boosted by a 7.9% rebound in household spending after the economy reopened in the spring, which represented four percentage points out of the 5.5% growth figure.
Ruth Gregory, senior UK economist at Capital Economics, said: “Overall, while the upward revisions to GDP are clearly welcome, Q2 was three months ago, and the recovery appears to have stagnated since.
“Even so, given that there is now thought to be less spare capacity in the economy that will only encourage the Bank of England to hike rates in the not-too-distant future.”
Among the industries to gain from the spending spree were the hotel and restaurant sector, up 87.6%, and the wholesale and retail trade, up 13.1%, while hairdressing saw a rise of 20.4%.
The ONS said the increases reflected the reopening of the economy as well as the economic boost from the Euro 2020 football tournament.
Ultimately, it is quite difficult to say if any form of stability can be maintained in the long run as it feel quite unlikely that the ongoing pandemic will end anytime soon either.
The ongoing fuel crisis in the UK is expected to have been brought back under control after days of long queues at petrol stations with many running out of fuel. However, the message, as of now, from Simon Clarke who is chief secretary of the Treasury is that the there is now enough fuel. He told Sky News' Kay Burley: "That crisis is now absolutely something which is back under control. "More fuel is now being delivered to petrol stations […]
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