UK economic growth slows sharply amid supply chain crisis
The UK’s economic recovery from its third Covid-19 lockdown slowed sharply between July and September as supply chain problems held back growth, according to official figures.
Figures from the Office for National Statistics (ONS) show the economy’s growth was hit by rising infection rates, the pandemic and global supply shortages.
The country’s national output grew by 1.3 percent in the third quarter of the year, which was lower than the 1.5 percent analysts had forecast and down from 5.5 percent in the previous three months.
That left the UK economy more 2.1 percent below its pre-crisis level in the fourth quarter of 2019.
The impact of the ending of remaining lockdown restrictions in July was blunted by staff shortages and supply constraints, with a poorer trade performance also acting as a brake on growth.
Services were among the three main parts of the economy which recorded the sharpest growth. A rise of 30 percent in business for hotels and restaurants meant the sector – which accounts for nearly four fifths of GDP – grew by 1.6 percent over the quarter.
A decline of 0.3 percent in manufacturing output limited growth in the broader production sector to 0.8 percent, while construction had a 1.5 percent decline.
Car sales have been particularly negatively affected by a shortage of semi conductor chips, according to the ONS.
In September alone, gross domestic product had a rise of 0.6 percent, following a growth of 0.2 percent and a fall of 0.2 percent in August and July respectively.
Based on monthly figures, which dates the pre-crisis peak in the economy to February 2020, GDP is 0.6 percent below the level before the pandemic hit.
The ONS chief economist, Grant Fitzner, said, “Growth picked up in September and the UK economy is now only slightly below pre-pandemic levels.
“This latest increase was led by the health sector, boosted by more visits to GP surgeries in England. Lawyers also had a busy month as house buyers rushed to complete purchases before the end of the stamp duty holiday. However, these were partially offset by falls in both the manufacture and sale of cars."
“Notably, business investment remained well down on pre-pandemic levels in the three months to September. Meanwhile the trade deficit widened as goods exports to non-EU countries fell and imports – particularly of fuel - from non-EU countries increased.”
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