UK economic growth slows sharply in October as restrictions bite

UK economic growth slowed sharply in October as restrictions were tightened to control the spread of a second wave of coronavirus (Covid-19), official figures show.

The bite

The Office for National Statistics (ONS) said gross domestic product (GDP) rose 0.4% month on month in October, marking the sixth month in a row of recovering output following the recession in April.

But growth pared back significantly from 1.1% in September as new restrictions were brought in to try to curb rising cases of coronavirus, hitting pubs and restaurants hard.

The ONS added that the economy still remains 7.9% below pre-pandemic levels.

We’ve released GDP figures for October 2020.

▪️ GDP grew 0.4% in October but is 7.9% below its pre-pandemic peak
▪️ Services grew 0.2% (8.6% below Feb)
▪️ Manufacturing grew 1.7% (6.6% below Feb)
▪️ Construction grew 1.0% (6.4% below Feb)

➡️ https://t.co/OKSTHC8HDM pic.twitter.com/ml6GqluRdF

— Office for National Statistics (ONS) (@ONS) December 10, 2020

Experts are predicting GDP will slam back into reverse in November and the final quarter of 2020 due to the second national lockdown in England. Chancellor Rishi Sunak said:

I know people are worried about the winter months, but we will continue to support people through our Plan For Jobs to ensure nobody is left without hope or opportunity.

Trade unions recently criticised the November spending review from Sunak, saying that:

for all the government’s talk of levelling up, this spending review will level down Britain.

Frances O’Grady of the Trades Union Congress said:

Workers expecting a national minimum wage increase – not least the two million who are key workers – have been let down by the government’s decision to row back on the full rise they were promised.

If the Chancellor wants to stop mass unemployment, the test will be how quickly today’s infrastructure announcements deliver enough good jobs in the parts of the country that need them most.

The TUC has shown that investing £85bn in green transport and infrastructure could create more than 1.2 million jobs in two years. And the chancellor should have acted to unlock the 600,000 existing gaps and vacancies in the public sector.

Hit hard

The figures show that the services sector was the hardest hit in October, with growth almost grinding to a halt – at 0.2% against 1% in September as pubs and restaurants were hit by the 10pm curfew and tighter restrictions.

Jonathan Athow, deputy national statistician at the ONS, said:

The UK economy has now grown for six months running but still remains around 8% below its pre-pandemic peak.

Public services output increased, while car manufacturing continued to recover and retail again grew strongly.

However, the reintroduction of some restrictions saw services growth hit, with large falls in hospitality, meaning the economy overall grew only modestly.