UK economy grows by record 15.5% in Q3 as Covid restrictions eased
The UK economy grew by a record 15.5% in the third quarter as lockdown measures were eased, but slowed in September, according to figures released on Thursday by the Office for National Statistics.
Although the quarterly growth reflects some recovery of activity following the record contraction seen in the second quarter, the economy is still 9.7% below where it was at the end of last year. Analysts had been expecting growth of 15.8% in Q3.
Between April and June, GDP contracted 19.8%.
Compared with the same quarter a year ago, GDP fell by 9.6% following a 21.5% contraction in the previous quarter.
Output in the services, production and construction sectors increased by record amounts in the third quarter but remained below levels seen in the fourth quarter of last year, before the pandemic hit.
On the month, GDP growth slowed to just 1.1% in September from a revised 2.2% in August, missing consensus expectations of 1.5% growth.
Deputy national statistician for Economic Statistics Jonathan Athow said: "While all main sectors of the economy continued to recover, the rate of growth slowed again with the economy still remaining well below its pre-pandemic peak.
"The return of children to school boosted activity in the education sector. Housebuilding also continued to recover, while business strengthened for lawyers and accountants after a poor August.
"However, pubs and restaurants saw less business, after the ‘eat out to help out’ scheme ended, and accommodation saw less business after a successful summer."
Analysts warned the economy was set to shrink again as a result of the second lockdown that began earlier this month.
Thomas Pugh, UK economist at Capital Economics, said: "September and Q3 feel not just like old news but like ancient news! We already know that GDP will struggle to rise in October as tighter restrictions were imposed and that it will take a hammering in November as the effects of the second Covid-19 lockdown are felt.
"We have pencilled in a hit of 8.0% m/m in November. That would result in a 3.5% contraction in Q4. But the recent news of a potentially effective vaccine means that the outlook beyond the next six months could be much rosier than we have previously anticipated."
ING economist James Smith said there will be a sharp decline to follow the third-quarter GDP bounceback.
"We expect a 6-7% decline in UK GDP through November, rendering the unprecedented bounce-back we saw in the third quarter 'old news'," he said.
"We expect the latest lockdowns to leave the size of the UK economy some 15% below pre-virus levels, as of November," he added.