The UK economy made a faster recovery from the Covid pandemic than previously estimated, according to revisions to official figures revealing a stronger performance than Germany and France.
In a boost for Rishi Sunak before the Conservative party conference in Manchester beginning this weekend, revised figures from the Office for National Statistics (ONS) showed gross domestic product was 1.8% above pre-pandemic levels at the end of the second quarter this year.
In August, the ONS had estimated the economy was still 0.2% below the level at the end of 2019 before the global health emergency triggered one of the deepest recessions on record.
The changes mean the UK economy is no longer the worst performer in the G7. The chancellor, Jeremy Hunt, said: “We know that the British economy recovered faster from the pandemic than anyone previously thought, and data out today once again proves the doubters wrong.”
The ONS said growth in the first quarter of 2023 was revised up to 0.3% from an earlier estimate of 0.1%, while its estimate for growth in the second quarter was unchanged at 0.2%. Growth was also faster than expected last year. GDP is now estimated to have increased by 4.3% in 2022, revised from a first estimate of 4.1%.
Momentum is, however, beginning to stall as the UK economy grapples with higher interest rates from the Bank of England and stubbornly high inflation weighing on businesses and households amid growing fears of a recession.
Sandra Horsfield, of the investment bank Investec, said: “We see little in today’s numbers to derail our expectation of a more challenging growth picture ahead: we continue to forecast that the UK economy will enter a recession over the winter months.”
Ruth Gregory, the deputy chief UK economist at Capital Economics, said: “We still think that higher interest rates will trigger a mild recession involving a 0.5% fall in GDP in the coming quarters.”
Business surveys show private sector activity collapsed in September at the fastest rate, outside the Covid pandemic, since the financial crisis.
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Millions of households are braced for a sharp jump in mortgage payments, while inflation remains at the highest level in the G7, and taxes have risen by the most in any parliament since the 1950s – hitting consumer spending power.
Darren Jones, the shadow chief secretary to the Treasury, said: “Britain’s economy remains trapped in a low-growth, high-tax cycle after 13 years of economic mismanagement under the Conservatives.”
Source: www.theguardian.com