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As an increase in coronavirus cases dealt a blow to the hospitality sector, Britain’s economic recovery almost halted in October, official figures showed on Thursday.
After expanding 1.1 % in September, the gross domestic product rose 0.4 % on the month, the Office for National Statistics said the weakest growth since output collapsed during the first lockdown in April.
With more than 62,000 fatalities, Britain has Europe’s highest Covid-19 death toll and has also suffered the biggest economic hit of any major economy after GDP shrank by an unprecedented 19.8 percent in the second quarter of this year.
Output in October, before the pandemic hit Britain’s economy, was 7.9 % lower than it was in February, the ONS said, and 8.2 % weaker than in October 2019.
Until the end of 2022, government forecasters do not expect the economy to regain its pre-Covid size and the Organisation for Economic Co-operation and Development predicted that Britain’s recovery would be weaker than anywhere except Argentina.
“In October, the economy continued to grow, but at a snail’s pace. And with the Covid-19 constraints likely to remain in place for some time, the economy is still in for a difficult few months,’ said Capital Economics economist Ruth Gregory.
Although after the initial shock of the lockdown, the economy picked up rapidly, it lost momentum as Covid cases began to rise again in September and accelerated in October.
In much of the United Kingdom, government restrictions on socialising, as well as greater caution from some of the public, led to a 14.4 percent drop in output across the accommodation and restaurant industry.
In October, business surveys had already shown a slowdown in growth, and most economists believe that output fell completely in November, when the government imposed a partial four-week lockdown in England, which closed down non-essential shops and most hospitality venues.
The decline is, however, expected to be much more limited than in the first lockdown when restrictions were tighter and there was less time for businesses to adapt.
The end of the post-Brexit transition period will also be a challenge for many companies as of 1 January, when exporters will face new border checks on the goods they want to sell in the EU, and possibly also on tariffs.
