Home Business NewsBusiness UK’s economic engine idles – here’s what you need to know

UK’s economic engine idles – here’s what you need to know

by LLB Editor
10th Sep 21 10:33 am

Gross domestic product (GDP) is estimated to have grown by 0.1% in July 2021, and remains 2.1% below its pre-coronavirus (COVID-19) pandemic level (February 2020).

Production output increased by 1.2% in July 2021 and was the main contributor to GDP growth; boosted by the reopening of an oil field production site, which was previously temporarily closed for planned maintenance.

Construction contracted for a fourth consecutive month, with output down by 1.6% in July 2021, and is now 1.8% below its pre-pandemic level (February 2020).

Danni Hewson AJ Bell financial analyst, comments on GDP figures for July 2021:

“July brought “Freedom” from restrictions, it was a hugely anticipated milestone that signalled the UK was back in business and firing on all cylinders. But the reality was bogged down by supply snarl-ups and labour shortages as workers became hostages of the “pingdemic”. Significantly the economic engine slowed so much in July it almost stalled and delivered the kind of growth not experienced since the country was plunged back into lockdown in January. Even more worrying is the fact that much of the 0.1% of growth achieved seemed to come from the return to service of an oil field production site which had been closed for maintenance, without that push these figures would have been even more uncomfortable to peruse.

“But there are some drop offs that were easy to predict. All that legal work pushed through to help house buyers squeak under the barrier that fell as the stamp duty holiday came to an end fizzled out. House builders struggled to find brickies and the materials to go with them and retail sales fell as cautious consumers considered their options. A bright spot was the huge jump enjoyed by the travel sector as sun-starved dreamers dared to hop on a plane and the return of sporting events and festivals was embraced by the British public.

“What was interesting to note was the decent uptick in vehicle manufacturing which was unexpected after dire warnings from the SMMT last month, but it does signal that at least one major supply chain hurdle might have been partially overcome and that chip shortage might be easing up. But it’s unlikely that signals the beginning of the end for supply chain issues; all evidence seems to suggest things will get worse before they get better, and many people expect this Christmas to be beset with rising prices and shortages.”

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