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UK economy continues bounceback -- bumper summer coming

·2-min read
 (HM Treasury)
(HM Treasury)

The UK’s economic bounceback from the pandemic is continuing apace, with the latest figures topping City forecasts and raising hope of a bumper summer.

GDP grew by 2.3% in April, the fastest monthly rate since July last year, the Office for National Statistics reported.

That left economists raising forecasts for the whole year – some say the GDP will grow by 8%, the best result since 1941 – and predicting that all of the growth lost due to Covid-19 will be recovered by the third quarter.

Earlier this week, Bank of England chief economist Andy Haldane said the economy is going “gangbusters” and said pay rises should follow.

Emma Mogford, a fund manager of Premier Miton, said:

“Today’s GDP number confirms that the UK is witnessing a strong recovery. The release of pent-up demand, as consumers return to shops and restaurants, is significant. Investment by businesses is also picking up, now that there is greater certainty over the outlook post covid and post Brexit. While the outlook is positive, the Bank of England has a challenge ahead, to continue to support the recovery, while also keeping a lid on inflation expectations.”

Aside from inflation worries, the main concern at the moment is labour and skill shortages. Some employers say they can’t hire staff quick enough – a sharp turnaround from expectations that there would be an unemployment crisis post furlough.

City economists say the figures show that consumers are raring to spend. The delayed Euro 2020 football tournament could be another boon to the feelgood factor, especially if the England team does well.

Chancellor Rishi Sunak hailed promising signs “that our economy is beginning to recover”.

ONS Deputy National Statistician for Economic Statistics Jonathan Athow said:

“Strong growth in retail spending, increased car and caravan purchases, schools being open for the full month and the beginning of the reopening of hospitality all boosted the economy in April.

“The economy is now less than 4% below its pre-pandemic peak overall, however, declines in the often-erratic pharmaceutical industry, shutdowns in many car plants and large-scale oil field maintenance pulled back the headline rate of growth.”

“Exports of goods have now, broadly, recovered from the disruptions seen at the beginning of the year. However, imports of goods from the EU are still significantly down on 2020 levels.”

James Smith at the Resolution Foundation says the government must put more support in place for when the furlough scheme ends this autumn.

He said: “The Covid recovery is far from complete. Critically, the Government will need to plan for a recovery that continues beyond the phasing out of emergency support later this year.”

Jonathan Sparks at HSBC said. “We’ve grown accustomed to erratic GDP figures since the pandemic, but today’s data confirms that the UK reached a turning point in April.”

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