Economic bounceback from lockdown stronger than first thought

The UK’s economy grew by more than initial estimates suggested this summer as it bounced back from the deepest economic hit in more than 60 years.

Gross domestic product (GDP) rose 16% between July and September, the fastest quarterly increase since records began in 1955.

The new figure is ahead of the Office for National Statistics’ initial estimate of a 15.5% rise in GDP during the third quarter of the year.

But despite record growth, the third-quarter bounceback was not enough to make up the ground that the UK had lost in the preceding three months.

Between April and June, GDP dropped by 18.8%, revised down from earlier estimates of 19.8%, as the effects of the Covid-19 pandemic hit the economy. The first lockdown in England was launched on March 23.

GDP also dropped by 3% in the first quarter, up from previous estimates of 2.5%.

Taken together, it means that the level of UK GDP was still 8.6% lower in the third quarter than it had been at the end of 2019, before the pandemic.

“The economy saw a bigger bounceback in the third quarter than previously reported as it benefitted from reduced lockdown restrictions releasing pent-up demand,” said Howard Archer, chief economic advisor to the EY ITEM Club.

“It also gained some help from stimulus measures, including the temporary raising of the stamp duty threshold for house purchases, the VAT cut for the hospitality sector from mid-July, and the ‘Eat Out to Help Out’ scheme in August.”

The UK has also proven to be the worst-hit country among some of the world’s biggest economies.

When compared to other Group of Seven (G7) members, the UK economy was twice as badly hit.

The UK’s economy fell by 21.2% in the second quarter compared to the end of 2019. Only France at 18.9% and Italy at 17.8% came close to the hit that the UK took during that quarter.

The recovery in France and Italy has also seemed to be speedier than the UK, the ONS showed.

The differences between countries could be a reflection of how the virus spread, and how the lockdowns were implemented in the countries in question, the ONS said. It also said that some impacts may be measured differently in different countries.

Countries where the economy is heavily based on face-to-face interaction could also be more likely to be economically impacted by the virus.