The UK economy continues to recover in August, with retail a major driver

The UK’s economy continued to recover in July after the easing of Covid-19 lockdown restrictions, with GDP growing by 6.6% according to new figures published by the ONS. This means July GDP is 18.6% higher than its April 2020 low, in which there was a record fall of 20%.

Encouragingly, there was a major boost for the wholesale, retail and repair of motor vehicles subsector, which recovered to go above pre-pandemic levels in February 2020. And earlier this week, the KPMG-BRC sales monitor found that UK retail sales grew 3.9% in August, as the sector grew for the third consecutive month, while the BDO's latest High Street Sales Tracker said in-store sales reached their highest level since February.

Despite this, GDP remains 11.7% below February 2020 levels. Last month, the UK was officially declared as being in a recession for the first time in 11 years as a result of measures to slow the spread of Covid-19.

In the new release, the ONS also revealed that GDP fell by 7.6% in the three months to July, following two consecutive quarterly falls, “as government restrictions on movement dramatically reduced economic activity”.

Darren Morgan, director of economic statistics at the ONS commented: “While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.

“Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements. Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time.

“All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover. However, both production and construction remain well below previous levels.”