UK economy grew in the second quarter – ONS

by | Oct 1, 2022

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The British economy nudged higher in the last quarter, official data showed on Friday, reversing an earlier estimate for a small decline.
The Office for National Statistics said UK GDP was estimated to have increased by 0.2% in the second quarter, after it revised its first estimate for a 0.1% contraction. Analysts had expected GDP to be unchanged on the first estimate.

The ONS noted that there continued to be weakness in the wholesale and retail trade, and in health industries. But services output was estimated to have increased by 0.2%, reflecting “an easing” in information and communication, and professional, scientific and technical activities output.

It had previously estimated that services output had fallen by 0.4%, reflecting a reduction in Covid-19 activities.

The ONS also released fresh revisions to its estimates for 2020 and 2021. It now believes GDP contracted by 11.0% during the first year, because of the impact of the pandemic, before growing 7.5% in 2021. It had previously estimated a 9.3% decline in 2020 and growth of 7.4% in 2021.

As a result, GDP has now been revised down to 0.2% below pre-pandemic levels.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The downturn in economic activity during 2020 looks even worse than previously thought, and the subsequent recovery even weaker.

“Accordingly, GDP in the second quarter of 2022 was 0.2% below its fourth quarter peak, rather than 0.6% above it, implying that the damaged inflicted to the economy’s supply side by Covid and Brexit is even larger than previously thought.”

Martin Beck, chief economic advisor to the EY Item Club, said: “Second quarter growth was revised, reducing concerns that the economy may already be in recession. But GDP is now estimated to be 0.2% short of pre-pandemic levels, not 0.6% above.

“The situation for consumers remains challenging. The full effects of high inflation are still to feed through to household income, while the rise in swap rates since the mini-budget could cause an increase in mortgage payments for borrowers on variable rates, or coming off a fixed rate deal.

“The outlook for the economy is uncertain.”

The ONS also said on Friday that the current account deficit had narrowed in the second quarter, to £33.8bn from £43.9bn in the first three months of the year. That was smaller than expected, with most analysts looking for around £43.6bn. As a share of GDP, the deficit declined to 5.5% from 7.2%.

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