The UK economy grew by 2.3 per cent in April after shoppers returned to the high street when non-essential shops reopened, official figures show, suggesting that the country is facing a strong post-pandemic recovery.
Estimates from the Office for National Statistics (ONS) show April experienced the fastest monthly growth since July 2020, when the economy jumped 7.3 per cent after being opened up from the first Covid lockdown.
This marks the third consecutive month of growth as coronavirus restrictions continue to ease to varying degrees in England, Scotland and Wales. Further easing is scheduled for 21 June, although the rapid spread of the Delta variant could put this at risk.
Monthly GDP index
Source: ONS. Data between Jan 1997 and April 2021, 2018 = 100
The UK economy remains 3.7 per cent below the pre-pandemic levels seen in February 202, although it is now 1.2 per cent above its initial recovery peak in October 2020.
April’s GDP growth was driven by the service sector, which accounts for about 80 per cent of total UK economic output. It grew by 3.4 per cent during the month, as more consumer-facing businesses were able to open their doors.
Output in the production sector fell by 1.3 per cent (the first fall since January 2021). Within production, mining & quarrying output was hit by a 15 per cent drop because of planned temporary closures for maintenance of oil field production sites.
The construction sector contracted by 2 per cent in April following a strong March, with new work slowing down faster than repair and maintenance.
Contributions to monthly GDP growth, Jan to Apr 2021
Source: ONS
Emma Mogford, manager of Premier Miton Monthly Income fund, said: “Today’s GDP number confirms that the UK is witnessing a strong recovery.
“The release of pent up demand, as consumers return to shops and restaurants, is significant. Investment by businesses is also picking up, now that there is greater certainty over the outlook post-Covid and post-Brexit.
“While the outlook is positive, the Bank of England has a challenge ahead, to continue to support the recovery, while also keeping a lid on inflation expectations.”
AJ Bell finance analyst Danni Hewson added that “there is a lot to be celebrated” in the latest set of GDP figures – at first glance.
“The UK economy is hurtling down the road to recovery at a rate of 2.3 per cent, slightly faster than had been expected by economists and the fastest it’s travelled since last summer’s reopening boost,” she said.
“Crucially it’s also higher than the peak experienced in October last year demonstrating the resilience of business and the desire of consumers to embrace their newly re-found freedoms.”
Hewson also said it should not be a surprise to see that the service sector is playing a big part in the UK’s recovery, given the number of non-essential retailers that were able to re-open in April.
“But the feeling is the recovery is lumpy and delays in lifting restrictions could make it even more bumpy. The service sector is still far below its pre-pandemic levels and many in the hospitality sector are concerned about making it through the summer if social distancing continues to constrain sales,” she finished.
“And the next few months will bring challenges as programmes like furlough begin to unravel and there have already been calls for the chancellor to consider extending the scheme into the autumn for sectors unable to get back to fighting strength.
“Yes, there is much to celebrate but there’s also a note of caution, we’ve been here before and we understand how fragile recovery can be and how quickly the pandemic can tilt the field.”