The Office for National Statistics (ONS) – which in terms of exposure and public awareness is having what might be called a 'good' pandemic – announced this week that there was record growth in Quarter 3 of 2020. GDP grew by 15.5% in the quarter, the quickest growth since 1955 when records began. This uptick was substantially driven by the reopening of the hospitality sector, helped by the Chancellor's 'Eat Out to Help Out' scheme. However, good news though this was on the surface, it left the UK economy still 9.7% smaller than at the end of 2019. This is way worse than some others such as the US (now 3.5% smaller) and the eurozone (4.3% down). It emphasises the reliance of the UK economy on services and there are also other challenges ahead which could further stall any immediate recovery.
One is the national lockdown in England which has hit hospitality once more. Although having their own specific approaches, similar tightening of restrictions in Scotland, Wales and Northern Ireland (where politicians are having a difficult time agreeing on restrictions at the moment) will also have an economically depressive effect. A second economic downturn is therefore expected in November and indeed the economy had already started to slow down again in recent months even before this latest dose of lockdown. With uncertainty on Brexit and the clock ticking inexorably on that front too, there are other challenges ahead in addition to the pandemic. As December approaches, typically the highpoint economically for retailers, the government will be hoping that the planned release of national lockdown in England on 2 December can go ahead as planned. Infection and death rates are still on the rise but this is not necessarily unexpected given the time lag between introducing it and its having an impact. In the light of the need for an economic boost, Number 10 will be watching the figures even more closely than normal.
Wayne Bartlett is an author for accountingcpd. To see his courses, click here.
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