Official data from the United Kingdom released on Friday showed that the country’s economy barely grew in the month of July as the Delta variant of Coronavirus had spread rapidly within the after the lifting of lockdown restrictions.
According to the Office for National Statistics, July’s economic output growth was just 0.1 per cent This is the lowest monthly increase in the economy since January, when Britain had entered a new national lockdown.
Reuters polled economists and found that they had generally expected 0.6 per cent growth in gross domestic product month on month for the economy. Only two analysts expected such as weak reading as was announced.
Rishi Sunak, Finance Minister of the country, however said that the recovery of the British economy was well underway. However, the weak growth is likely to strengthen the case of Bank of England policymakers for tightening of monetary policy. They believe that it is too early to begin talking about raising interest rate – despite the fact that inflation appears to be rising rapidly.
Paul Dales, Chief U.K. Economist at Capital Economics consultancy said that “Stalling GDP and rising inflation will leave a whiffof stagflation”
Britain experienced a sharp rise in Covid-19 cases during July. The Delta variant spread quickly, leading to many thousands of workers being forced to remain at home by self-isolation rules that have been relaxed.
According to the ONS, some businesses complained that staff could not come to work due to being required to self-isolate. A fall in construction output was also linked to global supply chain problems after the lockdown.
The UK’s dominant service sector, which was flat in June, saw output of consumer-facing services fall for the first time since January. This was mainly due to a decline in the retail sector.
The return to oil production boosted industrial output by 1.2 per cent. However, manufacturing was flat.
Monthly construction output decreased by 1.6 per cent.
Previous data suggested that the economy’s post-lockdown recovery lost momentum in July. Retail sales and consumer borrowing fell, and businesses reported a slowdown in their growth, according surveys of purchasing managers.
(Adapted from CNBC.com)