Business is booming.

UK economy grows at fastest pace since last summer

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The UK economy grew in April at its fastest pace since the coronavirus reopening last summer, with strong retail spending and the full return of schooling boosting performance and raising hopes of a rapid rebound to pre-pandemic levels of output.

The volume of goods and services produced by the UK economy rose 2.3 per cent in the month, more than offsetting the third lockdown’s decline of 1.5 per cent in the first quarter and putting the increase in gross domestic product on a path for a strong second quarter.

Performing slightly better than already optimistic economists forecasts, GDP was 3.7 per cent below the pre-pandemic level in February 2020, the smallest gap since the start of the crisis.

Jonathan Athow, ONS deputy national statistician for economic statistics, 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.”

He added that the growth rate would have been even stronger without declines in the often-erratic pharmaceutical industry, shutdowns in many car plants and large-scale oilfield maintenance which pulled back the headline rate of growth.

Chancellor Rishi Sunak said the figures were “a promising sign that our economy is beginning to recover”.

The services sector grew 3.4 per cent compared with the previous month, with consumer-facing services reopening. However, output in the production sector fell by 1.3 per cent, the first fall since the start of the year and output in the construction sector dropped after the strong growth in March.

Output is expected to expand further in May following the reopening of indoor hospitality and other businesses, boosting GDP growth to 4.2 per cent in the second quarter, according to estimates from the Bank of England.

James Smith, economist at ING, said that the end of most restrictions on June 21 is likely to be postponed, but probably only by a few weeks until more people have been fully vaccinated, which would mean “that from an economic perspective, the impact probably won’t be huge”.

Separate data published by the ONS on Friday showed that Britain’s trade grew gradually in April as the effects of coronavirus and the imposition of customs controls after Brexit no longer dominated the figures.

Imports grew from both EU and non-EU countries in the month, the ONS said, while exports to the EU edged up, but dipped to non-EU countries.

The overall statistical picture on trade following the end of the transition period with the EU is complicated by the UK figures not matching those published by EU statistical agencies, which show a much larger Brexit effect on trade volumes in both imports and exports since the start of the year.

The ONS said that despite the uncertainty over trade patterns caused by Brexit and coronavirus, “trade with non-EU countries continues to be higher than with EU countries in both imports and exports”.

Read More: UK economy grows at fastest pace since last summer

2021-06-11 06:35:20

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