UK GDP: Recovery lags other G7 economies as growth slows

Uk Gdp: Recovery Lags Other G7 Economies As Growth Slows

The UK economy, which has struggled with supply chain disruptions and high energy prices, grew 1.3% in the quarter, up from 5.5% in the previous three months when many coronavirus restrictions were lifted.

That said the Office for National Statistics (ONS) on Thursday services delivered growth in the quarter, led by spending on housing and food. But wholesale and retail trade shrank by 2.5% due to weak consumer spending. Industrial production also fell slightly.

Germany, France and Italy all reported stronger growth for the third quarter and are much closer to completing their recovery from the pandemic recession than the UK. US GDP, which has already returned to pre-pandemic levels, up 0.5% in the quarter.

“The UK has still regained less of the output lost during the pandemic than the eurozone or the US,” said Kit Juckes, a strategist at French investment bank Societe General.

Kallum Pickering, senior economist at Berenberg, said UK growth was “slightly lower than” his bank’s own forecast of 1.4%, but added that the country remained “on track” to return to pre-Covid GDP levels in the first quarter of 2022.

“While private consumption and government spending grew faster than we expected, business investment and exports disappointed,” he added on Thursday.

Pickering pointed out that problems and shortages in the global supply chain were only partially responsible for a slowing UK economy, adding that business investment had fallen after the Brexit vote in 2016, before collapsing amid the pandemic.

“The UK’s unique Brexit-related issues and higher non-tariff barriers with its largest market (the EU) undoubtedly amplify port and transport challenges,” he said.

UK economic output shrank by 20.4% in the second quarter of 2020, greater contraction than any other major economy when the recession broke due to lockdowns.

The UK suffered a contraction greater than any other G7 country last year at 9.7%, so it must climb further to return to pre-pandemic size.

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