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The UK economic system has bounced again from the Covid-19 pandemic a lot quicker than beforehand estimated, in accordance with new official figures that present Britain is not the worst performer within the G7.
Within the three months to June, gross domestic product was 1.8 per cent above its pre-pandemic stage within the remaining three months of 2019, the Workplace for Nationwide Statistics stated on Friday. Beforehand, the statistics company estimated that GDP in Q2 2023 was 0.2 per cent under its This fall 2019 stage.
Earlier than the revision, the UK was the one G7 economic system to not have returned to pre-pandemic ranges. The brand new figures give Britain the same efficiency to France and a stronger rebound than Germany, the eurozone’s largest economic system, however its restoration stays weaker than different nations.
The majority of the change got here from the big revisions introduced at the beginning of September for the interval as much as 2021, when the ONS added almost 2 per cent to the dimensions of the UK economic system. There have been smaller modifications for 2022 and the primary two quarters of 2023.
![Bar chart of Q2 2023, % change with Q4 2019 showing the UK economy is larger than pre-pandemic levels](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F0cb1e230-5e90-11ee-b78a-a39c57b08a33-standard.png?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1)
Chancellor Jeremy Hunt stated: “We all know that the British economic system recovered quicker from the pandemic than anybody beforehand thought and knowledge out as we speak as soon as once more proves the doubters incorrect.”
“The easiest way to proceed this development is to stay to our plan to halve inflation this yr,” he added.
The ONS revisions must be taken under consideration by the Workplace for Finances Duty, the fiscal watchdog, because it prepares forecasts to accompany Hunt’s Autumn Assertion on November 22.
Nevertheless, economists identified that the UK’s efficiency was nonetheless fairly poor relative to different main economies.
Ruth Gregory, economist on the consultancy Capital Economics, stated the info did “not change the large image that the economic system has lagged behind all different G7 nations, apart from Germany and France, because the pandemic. And that’s earlier than the complete drag from increased rates of interest has been felt.”
She predicted that increased interest rates — now at 5.25 per cent — would set off a gentle recession involving a 0.5 per cent fall in GDP within the coming quarters.
Samuel Tombs, economist on the consultancy Pantheon Macroeconomics, stated: “A steady image would possibly take a while to emerge, on condition that statistical authorities in different nations are revising their knowledge too.”
GDP is now estimated to have elevated by 4.3 per cent in 2022, up from earlier estimates of 4.1 per cent.
Development between the primary and the second quarters of 2023 was left unrevised at 0.2 per cent, however the ONS revised upwards the enlargement of output in Q1 to 0.3 per cent from 0.1 per cent, as beforehand estimated.
Friday’s knowledge additionally confirmed that family spending grew by 0.5 per cent within the second quarter of 2023, which some economists urged was a sign that the price of residing disaster is coming to an finish.
Family disposable revenue rose by 1.2 per cent in three months to June, supported by a restoration in actual wages and the uprating of the worth of advantages to take account of final yr’s excessive inflation charge.
That helped enhance the typical proportion of disposable revenue saved by households to 9.1 per cent within the second quarter, up from 7.9 per cent within the earlier three months.
Martin Beck, chief financial adviser to the EY ITEM Membership, a consultancy, stated that whereas the info confirmed a a lot stronger financial restoration in 2021 than earlier estimates, it largely confirmed that the UK had seen negligible financial development for the previous two years.
“Sluggishness will characterise exercise for the close to future,” he stated.