Video report by ITV News Business and Economics Editor Joel Hills
The economic recovery continued at an impressive pace in July as coronavirus restrictions continued to lift. Some schools went back. Pubs, restaurants and hotels reopened in time for the summer season.Output rose by 6.6%, slightly weaker than in June but that’s full-throated none-the-less. Gross Domestic Product (GDP) was 11.7% below its pre-Covid peak.
ITV News Business and Economics Editor Joel Hills explains the latest ONS figures
The Office For National Statistics calculates that in three months (May - July) the UK has managed to claw back just over half of the output we lost during lockdown.The key question now is how long will it take us to recover the other half?Consumer spending has returned to pre-crisis levels but people are spending in different ways and on different things and, as a result, different industries have recovered at different paces.
Campsites, caravan parks and rental cottages benefits from a “staycation” - July 2020 was as busy for them as July last year - but hotels continued to struggle.Factories churned out PPE, ventilation equipment, cars, food and alcohol but clothing production lines are quieter than they have been for many years.
Online orders continued to surge, delivery and warehousing companies scrambled to respond but spare a thought for anyone operating an airline, an airport or a travel agent.The chief economist at the Bank of England complained this week that the recovery isn’t being given as much credit as it should. “The popular narrative,” saysAndy Haldane “is still on the gloomy side of neutral”.Fair comment, there are reasons to be optimistic but there are also plenty of what economists call “downside risks” too and the recovery will almost certainly fade as we head into autumn.An obvious danger is the prospect of a sharp rise in unemployment. The ONS estimates that 94% of UK businesses are up and running again and yet almost three million people remain furloughed.
The Job Retention Scheme ends in October. The Treasury Select Committee has on Friday morning leant its voice to the chorus urging the chancellor to extend it in some form.Rishi Sunak is also under pressure to demonstrate that the enormous sums of money he has borrowed to support households and businesses will, at some point, be repaid. Tax rises feel unlikely in the short-term, they would inevitably slow growth down.Much depends on the path of the virus. The infection rate is climbing again, restrictions have been reimposed.And then there’s Brexit. The risk of “no deal” has loomed into view again. Any disruption to trade with European Union in January would be spectacularly unhelpful.