UK economy grows for a fifth month as diners rush to cafes and bars | Economic recovery
Britain’s economy grew for a fifth month in June as the reopening of indoor hospitality and visits by patients to their GPs helped boost national output by 1%, official data has shown.
Despite the government’s decision to delay the full lifting of restrictions by four weeks to 19 July, the Office for National Statistics said growth in June was almost twice as rapid as the 0.6% in May.
Gross domestic product remained 2.2% below the level reached before the Covid-19 pandemic in February 2020, however, and some analysts said they expected the pace of recovery to have slowed in July as infection rates rose.
Growth in June was the result of a 1.5% expansion of the service sector, helped by a rise of just over 10% for restaurants, cafes and bars. Services account for about 80% of GDP.
The ONS said there had also been a 4.5% increase in health services, which accounted for almost half the monthly rise in output. Visits to GPs are the biggest element in the health services component of GDP, and the ONS said there had been a pick-up in non-Covid health activity in June.
Samuel Tombs, a UK economist at Pantheon Macro, said he expected GDP to increase by just 0.2% in July as businesses that relied on face-to-face transactions were affected by renewed consumer caution.
Data for the second quarter of 2021 showed the economy was 4.8% bigger than it was between January and March, when it was constrained by curbs on activity and GDP contracted by 1.6%.
Between April and June, the UK grew at more than double the rate of the 2% in the eurozone and faster than the US, which grew at a quarterly rate of just over 1.5%.
Ruth Gregory, a UK analyst at Capital Economics, said the main driver of growth in the second quarter had been a 7.3% jump in consumer spending, but that the economy had also been boosted by an increase of 6.1% in government spending and 2.4% increase in investment.
The chancellor, Rishi Sunak said: “Today’s figures show that our economy is on the mend showing strong signs of recovery, thanks to our Plan for Jobs and successful vaccine programme.
“I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people. With the fastest quarterly growth rate among the G7 economies, we have exceeded expectations, and I’m pleased to see the UK bouncing back.”
The ONS said the economy was 4.4% smaller than in the final three months of 2019 on a quarterly basis. The US has already made up the ground lost during the pandemic.
Jonathan Athow, the deputy national statistician for economic statistics at the ONS, said of the June data: “The UK economy has continued to rebound strongly, with hospitality benefiting from the first full month of indoor dining, while spending on advertising was boosted by the reopening of many services. Health services also showed growth, with many more people visiting their GP.
“The often-erratic pharmaceutical industry saw a large monthly fall while oil and gas production again fell as North Sea maintenance continued. Energy usage also dropped as summer finally arrived across the UK.”
Separate ONS figures for trade showed exports to the EU above pre-Brexit levels after a small rise from £14.1bn to £14.3bn in June. Officials said there were signs of trade with the EU returning to normal after the disruption seen at the turn of the year, with exports to the EU above those to non-EU countries for a second month.