Recovery slows as businesses struggle with worker shortages and shipping delays
The UK’s economic recovery slowed sharply between July and September as supply chain problems held back growth, official figures have shown.
The economy grew 1.3 per cent in the third quarter of the year, lower than the 1.5 per cent analysts had forecast and down from 5.5 per cent in the previous three months.
It means the UK economy was 2.1 per cent smaller between July and September than it was before the pandemic.
Grant Fitzner, the chief economist at the ONS, said: “Growth picked up in September and the UK economy is now only slightly below pre-pandemic levels.
“This latest increase was led by the health sector, boosted by more visits to GP surgeries in England.
“Lawyers also had a busy month as house buyers rushed to complete purchases before the end of the stamp duty holiday.
“However, these were partially offset by falls in both the manufacture and sale of cars.”
Growth picked up in September to 0.6 per cent – slightly faster than the consensus forecast. However, 0.5 percentage points of that were attributed to the health sector and represented an increase in face-to-face GP appointments.
New data showed that the performance was worse than first thought in July and August, with signs that global supply disruption was having an impact.
It revealed a 0.2 per cent contraction in July, against the 0.1 per cent fall previously estimated, while August showed growth of 0.2 per cent, down from 0.4 per cent.
The recovery varied in pace across different parts of the economy. Services, which make up around 80 per cent of the UK’s total output, recorded the strongest growth.
The sector expanded 1.6 per cent over the quarter, thanks largely to a big jump in hotel bookings as more people chose to spend their holidays in the UK than in previous years.
However, manufacturing suffered from problems getting hold of supplies and finding enough staff to meet demand. The broader production sector, which includes manufacturing, shrank 0.8 per cent compared to the previous quarter. Construction slumped 1.5 per cent over the quarter but showed signs of a rebound in September.
Car manufacturing has been particularly badly hit by a shortage of semiconductor chips, with output down 8.2 per cent in the third quarter.
Chancellor Rishi Sunak claimed the new data demonstrated that the government’s economic policies were working.
“The economy continues to recover from Covid and thanks to schemes like furlough, the unemployment rate has fallen for eight months in a row and we’re forecast to have the fastest growth in the G7 this year,” he said.
The UK has recovered more slowly than some other wealthy nations, notably the US which has already returned to pre-pandemic levels of gross domestic product (GDP).
Source: Independent
