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UK Economy 11.7% Below Pre-pandemic Levels in July

By Jon Munnery
11 September 2020

July saw the UK economy increase in scale by as much as 6.6 per cent but the headline rate of GDP remained 11.7 per cent below pre-pandemic levels.

Having recently recorded two consecutive quarters of overall contraction, the British economy is officially in recession but each of the last three months saw GDP increases as the country fought to recover from the worst of the coronavirus crisis.

Growth recorded in July was positive at 6.6 per cent but that pace of expansion represents a slowdown relative to June when GDP went up overall by 8.7 per cent, according to the Office for National Statistics (ONS).

The second quarter of this year saw the economy shrink at the fastest rate on record and by an astounding 20.4 per cent as much of the country went into lockdown.

Such was the rate of contraction in March and April that the economy is still yet to recover more than half the activity that was lost in those weeks and GDP remains 11.7 per cent smaller than was the case in February prior to the Covid-19 crisis.

However, there have been some “notable improvements” in some parts of the economy in recent months with pubs, campsites and hairdressers among those doing particularly well in July.

Car sales also exceeded pre-crisis levels for the first time in July, with showrooms “having a particularly busy time,” according to the ONS.

All manufacturing sectors and housebuilders saw an upturn in their output in July but neither the production or construction aspects of the economy are yet close to the levels they were operating at in February.

With the Coronavirus Jobs Retention Scheme currently scheduled to close at the end of October, there are concerns that the UK could soon be facing an unemployment crisis and a huge rise in redundancies.

Economists are also fearful of the impact that a second wave of coronavirus might have on businesses across the country and the fledgling recovery achieved in recent months after the enormous downturns of March and April.

Jonathan Munnery
Partner
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