UK economy’s bounce back slowed in July despite ‘Freedom Day’
THE UK economy's bounce back from coronavirus slowed in July despite the removal of all Covid restrictions.
Growth in gross domestic product (GDP) was 0.1% in July compared to 1% in June, according to the Office for National Statistics.
GDP remains 2.1% below the pre-pandemic level recorded in February 2020.
"After many months during which the economy grew strongly, making up much of the lost ground from the pandemic, there was little growth overall in July," said ONS deputy national statistician for economic statistics Jonathan Athow.
"Oil and gas provided the strongest boost, having partially bounced back after summer maintenance. Car production also continued to recover from recent component shortages."
He added: "The service sector saw no growth overall with growth in IT, financial services and outdoor events - which could operate more fully in July - offsetting large falls in retail and law firms."
"Meanwhile, rising costs and shortages of raw materials pegged back the construction sector again."
Despite the slow down, July was the sixth consecutive month of GDP growth as restrictions were eased across the country.
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Social distancing, capacity limits and face covering rules were removed in pubs, restaurants and shops from July 19.
That allowed nightclubs to reopen for the first time since March 2020 and gave festivals the green light to go ahead this summer.
Arts, entertainment and recreation activities grew 9% during July.
Production output also increased by 1.2% during the month and was the main contributor to GDP growth.
It was boosted by the reopening of an oil field production site, which had been temporarily closed for planned maintenance.
This reflected the easing of restrictions on social distancing from 19 July, when all rules were lifted.
However, construction contracted for a fourth consecutive month, with output down by 1.6%.
Services output was flat compared to the previous month, and remains 2.1% below its pre-pandemic level.
The UK's services industry includes the retail sector, the financial sector, the public sector, business administration, leisure and cultural activities.
Meanwhile, consumer-facing services fell by 0.3% in July - its first fall since January 2021 - mainly because of a 2.5% fall in retail sales.
The "pingdemic" and supply chain disruption also dented economic recovery.
Alpesh Paleja, lead economist Confederation of British Industry, said: "The UK's economic recovery continued in July against the backdrop of the 'pingdemic' gathering pace.
"Labour shortages and supply chain disruption have continued since, and are likely to have taken the edge off growth as we head into autumn.
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"Businesses hope the bulk of supply disruption will prove temporary, but firms are not confident that all shortages will fade any time soon."
Overall, GDP grew by 3.6% in the three months to July 2021, due to the performance of the services sector as lockdown was lifted.
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