LONDON – Britain’s economic recovery lost momentum in the summer despite the widespread lifting of coronavirus restrictions as supply chain problems took their toll, official figures showed on Wednesday.
While the Office of National Statistics said the economy posted modest growth in August as bars, restaurants and festivals benefited from the first full month of no coronavirus restrictions in England, the 0.4% increase was slightly less than expected.
On the back of weaker data from a number of industries, the agency also revised the July figure from 0.1% to a 0.1% decline, underscoring the volatile nature of the economic recovery.
Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said weakness would “trickle down” the numbers, particularly in the construction sector, which has now seen negative growth for four months in a row.
The UK economy remains 0.8% below its pre-February 2020 coronavirus pandemic level.
The International Monetary Fund forecast on Tuesday that the UK will grow 6.8% this year, more than any other developed nation in the Group of Seven, and a still high 5% next year. However, the UK economy experienced the worst recession of the seven in 2020, shrinking 9.8% of production.
With inflation expected to hit at least 4% in the coming months due to rising energy costs, low productivity, rising taxes and an uncertain COVID background, there are concerns that the economy will underperform in the coming months.
Widespread shortages are also being reported across the UK, most clearly in the long lines seen at gas stations over the past few weeks and the empty shelves in supermarkets.
The causes of the shortage are widespread and are partly related to the fact that global supply chains adapt after the disruption of the pandemic. However, the UK is currently facing particularly acute problems as the number of truck drivers is well below normal. The causes are widespread, but it is clear that the combination of Brexit and the pandemic has caused many European Union workers to leave the UK and go home.
The disruption is clearly visible in the eastern English port of Felixstowe, the UK’s largest trading port. A jam in containers and in the port was attributed to a lack of drivers and prompted the Maersk shipping company to divert some of their largest ships.
Felixstowe’s backlog, which handles 36% of the UK’s freight container volume, will add to concerns over the crucial Christmas season.
Peter Wilson, managing director of the Cory Brothers shipping company, said the UK has a “major sticking point” with truck drivers and their demand to move goods out of ports.
“This is a really important issue for us here in the UK,” he told BBC radio.
When asked if it will affect Christmas, he said it has “potential” but stressed that the supply chain “is not going to fail in the UK”.
However, he said there is a possibility that some items will be unavailable shortly before Christmas, including toys and groceries.