Economic recovery takes a hit despite Eat Out To Help Out scheme

Credit: PA

The rate of recovery in the UK economy slowed in August, with Gross National Product (GDP) up by 2.1%, despite the Chancellor's Eat Out to Help Out scheme encouraging consumers to spend.

According to data from the Office for National Statistics (ONS), it was the fourth consecutive month of growth, after the economy took thumping hit during the strictest Covid-19 lockdown.

But August's growth is still less than half of what experts had expected, however, and is a major slowdown since July.

Analysts expected that GDP would increase by 4.6%, according to a consensus taken by Pantheon Macroeconomics.

That would have seemed in line with the positive increases in GDP seen in July (6.4%) and in June (9.1%).

But despite the hundreds of millions of pounds invested by the government to get the economy back on its feet in August, recovery still slowed.

Shadow Business Secretary Lucy Powell described the figures as "disappointing".

The Labour MP said the Eat Out To Help Out Scheme had likely helped some "growth, in part" but added: "I think now, all notion of the V-shaped recovery where we quickly jump out of this economic crisis now really should be put to bed."

She called on the government to "do more" to support business and jobs.

Rishi Sunak is expected to announce further support for jobs and businesses affected by coronavirus shutdowns on Friday.

The Treasury has announced Mr Sunak will detail “the next stage” of the Jobs Support Scheme, ahead of new restrictions expected for the hospitality sector - particularly in Covid hotspots.

The government's original furlough scheme, which has supported millions of workers and warded off larger levels of job losses, comes to an end later this month.

Chancellor Rishi Sunak promoted the scheme during a visit to the Isle of Bute off the west coast of Scotland in early August Credit: Jeff J Mitchell/PA

ONS deputy national statistician for economic statistics Jonathan Athow suggested the Eat Out To Help Out Scheme had limited impact across the wider economy.

"The economy continued to recover in August but by less than in recent months," he said.

"There was strong growth in restaurants and accommodation due to the easing of lockdown rules, the Eat Out To Help Out scheme, and people choosing summer ‘staycations’.

He added: "However, many other parts of the service sector recorded muted growth.

Mr Athow did point to construction as a part of the economy that continued to recover, "with a significant boost from housebuilding."

Manufacturing took a hit however, with growth way below pre-pandemic levels - especially car and aircraft production.