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The recovery of the UK economy slowed to 1.3% in the third quarter but picked up in September – Business | Companies

“While monthly production has rebounded over the quarter since the decline in July, this is more due to a temporary boost from the easing of restrictions rather than a significant improvement in the UK’s underlying growth path.

“Hospitality, arts and recreation, and health saw the greatest improvements as the relaxation of social distancing restrictions ended activity. In contrast, construction output declined in the third quarter as severe supply chain disruptions weakened the ability to fulfill orders.

“Business investment has fallen dis -pointingly below pre-pandemic levels after a modest increase in the quarter and, as such, remains the black point of the recovery, limiting the UK’s ability to increase productivity and maintain a sustained high wage economy.

“The third quarter slowdown is likely to mark the beginning of a sustained period of sluggish growth as staff shortages, supply chain disruptions and rising inflation increasingly stifle economic performance.

“As a result, on a quarterly basis, the UK economy is unlikely to return to pre-pandemic levels until next year, behind many of our international competitors.

“Given the growing headwinds facing the UK economy, we are warning the Bank of England not to hike rates in the short term to avoid destabilizing an already fragile recovery.”

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