The UK economy expanded for the third consecutive month in July, fuelled by coronavirus-related restrictions being eased in the services sector but output remained well below the pre-pandemic level.
Gross domestic product in the UK grew 6.6 per cent in July compared with the previous month, data published by the Office for National Statistics on Friday showed. This is marginally weaker than the 6.7 per cent expansion forecast by economists polled by Reuters.
“While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic,” said Darren Morgan, ONS director of economic statistics.
The services sector, which accounts for about 80 per cent of the economy, grew 6.1 per cent. The expansion was largely driven by the reopening in July of most of the hospitality industry, including restaurants, pubs and hairdressers.
However, the recovery in the manufacturing sector lost momentum and growth slowed to 6.3 per cent in the month, down from an 11 per cent monthly expansion in June. July’s weaker growth reflected an earlier reopening of the sector in mid-May.
Overall, July’s economic growth was slower than June’s monthly rate of 8.7 per cent.
Despite the increase in output, in July the UK economy was still 11.7 per cent smaller than in February, suggesting the country is facing a long climb back from the unprecedented contraction in the second quarter, the largest of any of the G7 economies.
The pound held steady after the data were published, up 0.1 per cent against the dollar at $1.2817. Against the euro, it was at €1.0826. One euro buys 92.33p.
A full recovery in output is key for the prospects of the millions of furloughed workers and the survival of many businesses. According to the Bank of England’s August forecast, however, the UK economy is not expected to recover to pre-pandemic levels until the end of next year.