Economy grows as hospitality firms bounce back from lockdowns

The UK’s gross domestic product increased by 1% in June.

Hospitality businesses were able to reopen for outdoor serving in April, and then indoor service in May (Damien Eagers/PA) (PA Wire)

The UK economy grew by 4.8% in the second quarter of 2021 as lockdowns lifted, getting people back into pubs, the Office for National Statistics has said.

The country’s gross domestic product (GDP) increased by a further 1% in June, creating five consecutive months of growth.

The economy also speeded up from 0.6% growth in May, the ONS said.

Lockdown restrictions slowly eased through much of the quarter.

Outdoor dining opened again in April, the first month the quarterly data includes, and further restrictions were lifted in May.

Another major contributor to the growth was GP surgeries across the country.

The number of people visiting their doctors for non-Covid complaints rose, increasing the consumption of health services by 5.1% in the second quarter.

This was also helped by Government spending on Test and Trace and the vaccination programme, the ONS said.

Deputy national statistician for economic statistics Jonathan Athow said: “The UK economy has continued to rebound strongly, with hospitality benefiting from the first full month of indoor dining, while spending on advertising was boosted by the reopening of many services.

“Health services also showed growth, with many more people visiting their GP.

“GDP is still around two percentage points below its pre-pandemic peak.”

ING developed markets economist James Smith said: “If we look at June data specifically, 0.45% of the 1% monthly growth came from health, which is linked to people visiting their doctor more.

“Still, quirks aside, we saw a clear increase in optimism among both consumers and businesses through the spring, and that will undoubtedly have helped drive a faster recovery in activity.”

Energy usage dropped as summer arrived in the UK, the ONS said.

Economists at Pantheon Macroeconomics had expected GDP to grow by 0.6% in June, and 4.7% across the quarter.

The Bank of England, meanwhile, had predicted growth of 5% across the quarter.

However, the surge of the Covid-19 Delta variant and the boom in the number of people self-isolating undermined some of this growth.

Nevertheless, the data marks a major improvement from the first months of the year.

In the first quarter the economy contracted by 1.6% as it battled with prolonged lockdowns.

That data covered the period to the end of March, so did not include the reopening of outdoor hospitality in April and indoor hospitality a month later.

Chancellor Rishi Sunak said: “I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people.”

Hard-pressed families and struggling businesses need more reassurance than improving GDP figures - they need support extended into next year

Christine Jardine, Liberal Democrat Treasury spokeswoman

But the Liberal Democrats and the Trades Union Congress warned against thinking that support could be withdrawn from the economy because of higher GDP.

TUC general secretary Frances O’Grady said: “The economy is still fragile, with nearly two million people still on furlough.

“A premature end to furlough will needlessly cost jobs and harm our economic recovery.”

Liberal Democrat Treasury spokeswoman Christine Jardine said: “These figures shouldn’t lull us into thinking that all our problems are solved. We still face potentially massive obstacles if the Government goes ahead with ending the furlough scheme and the Universal Credit uplift at the end of next month.

“Hard-pressed families and struggling businesses need more reassurance than improving GDP figures – they need support extended into next year.”

The ONS also reported that the UK’s trade deficit, excluding precious metals, rose by £3.6 billion to £5.2 billion in the second quarter of the year.

In June exports to non-EU countries fell by 5.6%, mainly due to drops in sales of pharmaceuticals and cars to countries outside Europe.

Exports to EU countries rose 1.2% in June, the statisticians said.