Despite supply chain issues, the UK economy is rebounding.
Despite persistent supply chain issues, the British economy revived in August, according to data released Wednesday, as individuals socialized more as a result of the easing of coronavirus restrictions.
The Office for National Statistics (ONS) reported that gross domestic product increased by 0.4 percent in the first full month since England’s Covid restrictions were lifted.
According to ONS official Darren Morgan, “the economy picked up in August as bars, restaurants, and festivals benefited from the first full month without Covid-19 restrictions in England.”
“However, decreased health activity was compensated by fewer persons visiting GPs and less testing and tracking.”
Construction declined for the second month in a row, as crucial materials were in short supply due to supply concerns.
“Despite supply chain difficulties, the recovery resumes,” said KPMG UK economist Yael Selfin.
“August GDP grew at a respectable rate as the economy recovered from supply chain difficulties and labor constraints.”
The UK economy is still 0.8 percent smaller than it was before the Coronavirus.
On July 19, all lockdown restrictions in England were lifted, letting individuals to attend shops and restaurants without wearing masks.
However, the ONS also announced that the GDP contracted by 0.1 percent in July, down from a previous forecast of 0.1 percent growth.
That was the first drop in activity since January, when harsher lockdown restrictions slowed things down.
Downwardly revised data for the automobile and energy industries, as well as improvements to how health production is assessed, weighed heavily in July.
A global shortage of microchips has hampered the production of automobiles.
In the second quarter, or three months ending in June, the British economy had recovered by 5.5 percent.
However, the impact of Brexit and the Covid epidemic, as well as supply chain constraints, continue to darken the picture.
In addition, shortages of lorry drivers, semiconductors, and motor gasoline have hampered activity, as have rising oil and gas prices, which have prompted high inflation.
The government’s furlough jobs support scheme was stopped, and Universal Credit welfare support was reduced, dimming the outlook.
“The recovery is undoubtedly experiencing further obstacles,” said Martin Beck, an EY economist.
“Consumers’ spending power is being squeezed by rising inflation, which is being driven by considerable rises in energy prices, and the recent cut in Universal Credit.
“And, whether true or not, persistent supply-side disruption and the narrative around shortages will stifle activity and sentiment.”
Supply limitations, according to Paul Dales, chief UK economist at research company Capital Economics, might cause the economy to stagnate.
“In the coming months, shortages may hurt worse,” he continued.
“The recent escalation of shortages, as well as the current fuel crisis, may indicate. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.