The UK financial system, battling provide chain disruptions and excessive power costs, expanded by 1.3% within the quarter, down from development of 5.5% within the earlier three-month interval when many coronavirus restrictions had been lifted.
The Workplace for Nationwide Statistics (ONS) stated Thursday that providers drove development within the quarter, led by spending on lodging and meals. However the wholesale and retail commerce shrank by 2.5%, damage by weak client spending. Manufacturing output additionally fell barely.
“The UK’s nonetheless received again much less of the output misplaced within the pandemic than both the eurozone or the US,” stated Equipment Juckes, a strategist at French funding financial institution Societe Common.
Kallum Pickering, senior economist at Berenberg, stated UK development was “barely beneath” his financial institution’s personal 1.4% prediction, however added that the nation remained “on observe” to return to its pre-Covid degree of GDP within the first quarter of 2022.
“Whereas non-public consumption and authorities spending expanded at sooner charges than we had anticipated, enterprise funding and exports dissatisfied,” he added in a word on Thursday.
Pickering identified that world provide chain points and shortages had been solely half guilty for a slowing UK financial system, including that enterprise funding had slumped after the Brexit vote in 2016, earlier than collapsing throughout the pandemic.
“The UK’s distinctive Brexit-related points and better non-tariff boundaries with its greatest market (the EU) little question amplify the port and transport challenges,” he stated.
The UK suffered a much bigger contraction than some other G7 nation final yr at 9.7%, and so has additional to climb to return to its pre-pandemic measurement.