UK posts 'disappointing' 2.1% August GDP growth

ONS data published today shows the accommodation and food services sector grew by 71.4% in August, contributing 1.2% to overall economic growth. Education and construction were also contributors, adding 0.35% and 0.19% respectively to GDP growth.

GDP has now grown by 8% in the three months to August 2020, as lockdown measures continued to ease, with all the headline sectors providing a positive contribution.

August 2020 GDP is now 21.7% higher than its April 2020 low, but the ONS warned it remains 9.2% below the levels seen in February 2020, before the full impact of the coronavirus pandemic was felt.

Economist at UBS Global Wealth Management Dean Turner described August's growth rate as "disappointing" at "only one-third of the rate of expansion recorded in July". 

He warned of an anticipated "softening" of economic activity in September and "the potential for further and more stringent localised restrictions on activity".

Turner added: "Doubt is growing as to whether the recovery can be sustained into the final quarter of the year.

"Sluggish progress is likely to encourage the Bank of England to increase its bond buying programme at its November meeting."

Investment director of personal investing at Fidelity International Tom Stevenson agreed, noting that while "there are positive indications from the Bank of England of growth returning to pre-pandemic levels before Christmas, this is far from a done deal".

He added: "The furlough scheme comes to an end this month and there is a real danger that fear of unemployment triggers a negative feedback loop of precautionary saving and dampens consumer confidence.

"Covid-19 cases are rising quickly in some parts of the country, with further localised lockdowns expected to be announced on Monday (12 August). This will undoubtedly hit output as the country braces itself for a long, difficult winter."

• Tweet  
• Facebook  
• LinkedIn  
• Send to  

• Topics
• Investment
• hospitality sector
• ons
• UBS Global Wealth Management Dean Turner
• Bank of England
• fidelity
• Economics
• GDP
• coronavirus
• UK
• UK economy
• financial performance
• Hospitality & Recreation
• education
• construction