Figures published by the Office for National Statistics (ONS) on 12 November highlighted that the UK economy grew by a record 15.5% in the quarter of July to September 2020.
This is the first positive sign for the economy in the past six months. Prior to this, the UK economy spent six months in a slump, due to the Covid-19 lockdown.
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Despite the fact that the economy grew by 15.5%, it was not enough to reverse all the damage caused by lockdowns as the UK economy is 8.2% smaller than it was before the pandemic hit.
Much of this Quarter 3 growth was due to the Eat Out to Help Out scheme, and the fact that students returned to schools and universities.
It’s probably going to be the case that the economy will shrink in the final quarter, though. This will be due to the renewed lockdown from 5 November.
Although the 15.5% growth is a welcome sign for the UK economy, it’s far too early to make any concrete observations.
The 15.5% increase saw growth across all sectors of the economy, such as construction, services, and manufacturing, however, was purely a bounce back impact rather than sustainable growth.
Economists have already pointed out that the economy is 10% smaller than it was prior to the coronavirus pandemic.
What’s more this growth should be viewed as happening at a time when infection levels were falling and people were chafing to get out and escape the tedium of lockdown.
Spotlight On The UK Economy Statistics
One major factor to note about this startling economic bounce-back was that September expansion was only 1.1%, marking the fact that the growth had already started to flag.
This followed 4 months of expansion, but was far weaker than seen in previous months.
Jonathan Athow from the ONS said:
“While all main sectors of the economy continued to recover, the rate of growth slowed again, with the economy still remaining well below its pre-pandemic peak.
The return of children to school boosted activity in the education sector. Housebuilding also continued to recover, while business strengthened for lawyers and accountants after a poor August.
However, pubs and restaurants saw less business after the Eat Out to Help Out scheme ended and accommodation saw less business after a successful summer.”
Another more worrying statistical trend for the quarter showed that the rate of unemployment rose by 243,000 from 4.5% to 4.8%.
As markets interpret this data, sentiment will affect a range of assets, including GBP pairs, the FTSE Index and individual stocks with UK (or GBP) exposure.