LONDON- Britain’s economy recovered half of its COVID-19 crash by the end of July, helped by pubs and restaurants reopening from lockdown, but the bounce-back is expected to slow as job losses mount and Brexit tensions rise.
After shrinking by a record 20 percent in the second quarter, output expanded by 6.6 percent in July, slower than June’s monthly rate, the Office for National Statistics (ONS) said on Friday.
Economists polled by Reuters had expected growth of 6.7 percent.
Finance minister Rishi Sunak welcomed the figures but added that people were rightly worried about the coming months.
The economy remains 12 percent smaller than its level in February, before the pandemic hit Britain.
“July was probably the last of the big step-ups in activity and a full recovery probably won’t be achieved until early 2022,” Thomas Pugh, an economist with Capital Economics, said.
In response, the Bank of England was likely to ramp up its bond-buying stimulus program by a third, or 250 billion pounds ($320 billion), Pugh said.
Britain’s economy suffered the sharpest second-quarter fall of any Group of Seven nation in the April-June period.
Hopes for a swift rebound have faded as businesses struggle to cope with social distancing rules and many people remain reluctant to travel on public transport or go to crowded places.
Tensions between London and Brussels over a post-Brexit trade deal are also mounting.
Furthermore, unemployment is expected to rise sharply because Sunak has ruled out extending his coronavirus job retention scheme which is due to expire at the end of October.
Parliament’s Treasury Committee urged Sunak to “carefully consider” a targeted extension of the scheme and other support measures, a call echoed by the head of a major employers group. – Reuters