The British economy remained nearly 10% smaller at the end of the third quarter of the year despite posting a record summer bounceback when many of the restrictions associated with the spring lockdown were lifted. The reimposition of restrictions means it will likely end the year even smaller.
The Office for National Statistics said Thursday that the economy grew by 15.5% in the July to September period. Though that was in line with market expectations, the recovery clearly eased in September, with monthly growth of only 1.1%, a clear sign that the recovery was already running out of steam before a resurgence of the coronavirus led to the economically damaging reimposition of restrictions.
That quarterly growth did not make up for the record 19.8% slump recorded in the second quarter when much of the economy was shuttered in connection with the coronavirus lockdown, and the 2.5% fall in the first three months of the year when the virus started to impact on everyday life. Despite the third-quarter improvement, the statistics agency said the economy was still 9.7% below where it was before the pandemic at the end of 2019.
And the worry is that the economy will shrink again in the fourth quarter of the year after the resurgence of the virus led to fresh curbs on everyday life across the U.K. England, for example, is in the midst of a four-week lockdown until Dec. 2.
“Britain’s COVID crisis, and its recovery phase, will take far longer than many people first thought," said James Smith, research director of the Resolution Foundation.
The imposition of fresh restrictions has come at a particularly inopportune time for many retailers, with Christmas just around the corner.
Under the terms of the current lockdown in England, nonessential places such as pubs, restaurants, hairdressers, golf courses, gyms, swimming pools, entertainment venues and stores selling items like books, clothing and sneakers, must remain closed until at least Dec. 2. Unlike the U.K.’s spring lockdown, schools and universities in England are remaining open this time, as are construction sites and factories.
The government has responded to the fresh curbs, announcing that its generous salary support scheme, which sees it paying 80% of the salaries of workers retained by firms rather than fired, will be extended through March.
Treasury chief Rishi Sunak acknowledged that the health steps taken in the past few weeks "mean growth has likely slowed further since then."
“There are still hard times ahead, but we will continue to support people through this and ensure nobody is left without hope or opportunity,” he said.