The UK economy saw a continuation to its recovery in august, with growth of just over 2%. This boost thanks in part to the contributions of the eat out to help out scheme.
The figure released today however was below expectations with the economy still 9% smaller than it was in February.
What is evident is that the recovery of the economy is slowing down, in June the economy grew by 8.7% and in July grew 6.6%. A full V shaped recovery may take a little longer than first anticipated.
Government should ensure that the recovery effort is managed carefully, with the possibility of further restrictions, government need to introduce sufficient business support packages in order to avoid a stall in recovery back to those levels recorded in February.
The figures released today back up calls for further support from businesses, especially those businesses effected by local restrictions. The Chancellor Rishi Sunak is expected to announce this support shortly.
Commenting on GDP figures for August 2020 published today by the ONS, BCC Head of Economics Suren Thiru said:
“While the latest data confirms a rebound in economic activity continued into August, the sharp slowdown in growth indicates that the recovery may be running out of steam, with output still well below pre-crisis levels.
“The increase in activity in August largely reflects a temporary boost from the from the economy reopening and government stimulus, including the Eat Out to Help Out Scheme, rather than proof of a sustained ‘V’-shaped recovery.
“Although the UK remains on course to exit recession in the third quarter, the looming triple threat of surging unemployment, further restrictions and a disorderly end to the transition period means the recent rally in economic output is likely to be short-lived.
“As a result, the government must stand ready to help firms navigate a difficult winter, beyond the Chancellor’s recent interventions. This means fixing the ailing Test and Trace system to prevent future damaging lockdowns and providing comprehensive support packages for firm’s subject to local restrictions.”
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