UK economy grew better than previously thought over the spring – ONS

The UK economy grew more strongly than previously thought in the second quarter as consumers curbed their savings to fuel a spending splurge.

Gross domestic product (GDP) increased by 5.5% in the April-June period, according to the Office for National Statistics (ONS), which had initially estimated growth of 4.8%.

It means that by the middle of this year, Britain was closer than previously thought to recovering the ground lost as a result of the coronavirus crisis.

The ONS now thinks that by the second quarter, GDP was 3.3% below where it was at the end of 2019, having initially estimated a 4.4% shortfall.

More recent figures suggest that the recovery has since experienced a sharp slowdown after supply chain issues such as a lack of 100,000 HGV drivers and global chip shortages, as well as the “pingdemic” forcing workers to isolate, took their toll.

But the second quarter was boosted by a 7.9% rebound in household spending after the economy reopened in the spring, which represented four percentage points out of the 5.5% growth figure.

The household saving ratio fell sharply to 11.7%, down from 18.4% in the first quarter, which was the second highest on record.

Among the industries to gain from the spending spree were the hotel and restaurant sector, up 87.6%, and the wholesale and retail trade, up 13.1%, while hairdressing saw a rise of 20.4%.

The ONS said the increases reflected the reopening of the economy as well as the economic boost from the Euro 2020 football tournament.

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