United Kingdom: Economic activity records quickest growth since July 2020 in April
June 11, 2021
GDP increased 2.3% in month-on-month seasonally-adjusted terms in April, which was above March's 2.1% increase. The reading marked the best result since July 2020, and was driven by notably faster growth in services, as non-essential businesses and leisure facilities were allowed to reopen during the month. Moreover, education output boomed as more pupils returned to school. However, the industrial and construction sectors dragged on activity.
On a rolling quarterly basis, GDP grew 1.5% in February–April, rebounding from January–March’s 1.5% fall.
The economy should continue to pick up speed over the remainder of Q2, aided by the further substantial easing of lockdown restrictions in May and improved consumer confidence. The rebound in Covid-19 cases in the last few weeks is unlikely to knock the recovery off-course, even though the government was recently forced to delay the last stage of lockdown easing.
As economists at Berenberg said:
“The economic effects [of a delay to lockdown easing] would be minor. Any damage from a later easing after most restrictions have been lifted anyway could be offset afterwards by a confidence effect if vaccines prove to be the game-changer. […] After the strong monthly gain in April, we raise our call for Q2 GDP to 5.0% qoq from 4.4% previously.”
Author: Oliver Reynolds, Economist