Economy slows despite hospitality boost
By Punchline reporter | 9th July 2021
The UK's economy grew more slowly than expected in May despite a boost from the hospitality sector.
The economy expanded by 0.8% in May as Covid restrictions eased, allowing pubs and restaurants to serve customers indoors.
It was the fourth consecutive month of growth, but a slowdown from the 2% growth in April. The economy remains 3.1% below pre-pandemic levels, according to the Office for National Statistics.
The ONS deputy national statistician, Jonathan Athow, said: "The economy grew for the fourth consecutive month, albeit at a slower pace than seen recently, but remains around three percent below its pre-pandemic peak.
"Pubs and restaurants, who were again able to welcome indoor guests, were responsible for the vast majority of the growth seen in May. Hotels also saw a marked recovery as restrictions lifted."
Commenting on GDP figures the BCC Head of Economics, Suren Thiru, said: "While the latest figures confirm the rebound in economic activity continued into May, the sharp slowdown in growth suggests that the recovery is losing a little steam as the temporary boost, from the earlier phases of reopening, fades.
"The increase in activity largely reflects a notable pick-up in output from pubs, restaurants and accommodation services, spurred by the easing of restrictions in the month, including the restart of indoor dining.
"The UK economy remains on track for a strong rebound in the second quarter. However, economic activity may remain muted in June as the impact of rising covid infections and the delay to the end of the roadmap are felt, despite an uplift to consumer activity from Euro 2020.
"Although the July reopening should provide a notable boost, any recovery may lose momentum if persistent staff shortages and supply chain disruption stifles business activity and rising covid cases prompt a renewed reluctance among consumers to interact and spend.
"Clearer guidance is needed for businesses on what they should be doing to keep staff and their customers safe. Government must also set out contingency plans for any future virus response, to give firms the confidence to fully reopen."
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