UK economic growth slows sharply in October with difficult year ahead as Brexit deadline looms large
Credit;PA
UK economic growth slowed sharply in October as restrictions were tightened to manage multiplication of the relentless second wave of Covid-19, official figures show.
The Office for National Statistics (ONS) said gdp (GDP) rose 0.4% month on month in October, marking the sixth month consecutively of recovering output in the nadir of the recession in April.
But growth pared back significantly from 1.1% in September as new restrictions were introduced to try and curb rising cases of coronavirus, hitting pubs and restaurants hard.
The ONS added that the economy still remains 7.9% below pre-pandemic levels.
Experts are predicting GDP will slam back to reverse in November and the final quarter of 2021 due to the second national lockdown in England.
Chancellor Rishi Sunak said: “I know people are worried about the winter months, but we will still support people through our Arrange for Jobs to ensure nobody remains without hope or opportunity.”
The figures reveal that the services sector was the hardest hit in October, with growth almost grinding to a halt – at 0.2% against 1% in September as pubs and restaurants were hit by the 10pm curfew and tighter restrictions.
But the manufacturing and construction sectors proved more resilient in October, growing 1.7% and 1% respectively, as they were largely spared in the tighter restrictions.
Jonathan Athow, deputy national statistician in the ONS, said: “The UK economy has grown for 6 months running but still remains around 8% below its pre-pandemic peak.
Car manufacturing
“Public services output increased, while car manufacturing continued to recuperate and retail again grew strongly.
“However, the reintroduction of some restrictions saw services growth hit, with large falls in hospitality, meaning the economy overall grew only modestly.”
The data shows that compared with a year earlier, GDP fell 8.2% in October and also over the three months to October, growth slowed to 10.2% from 15.5% between July and September.
The ONS said the six-month rebound since the record 19.5% fall in April means the economy has recovered by 23.4%.
But GDP has still not fully composed the mammoth 25.3% fall across the first and second quarters of 2021.
The outlook is gloomy for November as the one-month lockdown across England saw non-essential shops shut and pubs, cafes and restaurants forced to close except for takeaways.
The British Chambers of Commerce (BCC) warned on the difficult year-end for the economy, with the December 31 Brexit deadline also looming large.
BCC head of economics Suren Thiru said: “October's slowdown is likely to be followed by a substantial contraction in business activities in November because the effects of the 2nd coronavirus lockdown are felt, despite the prospect of a temporary boost from Brexit stockpiling.
“While a vaccine offers real hope, failure to prevent a disorderly end towards the transition period or further lockdown restrictions before a mass vaccine rollout is achieved would severely drag on any economic recovery.”
Howard Archer at the EY Item Club is forecasting GDP to drop as much as 5% in November, but said a Brexit stockpiling boost for factories means a fourth quarter contraction of “no more than 2%”.
