The coronavirus pandemic remains one of the most discussed topics in the world for more than six months. Unfortunately, governmental as well as private organizations are struggling to cope with problems caused by the pandemic. Moreover, even the countries with the largest economies in the world suffered significant losses. It is worth noting that the U.K. economy grew by 15.5% in the third quarter based on the information taken from the preliminary figures published on Thursday.
Hopefully, the country’s economy begins to rebound from a sharp downturn. Interestingly, economists expected a 15.8% quarter-on-quarter expansion in GDP (gross domestic product) in the three months to September. As a reminder, it comes after a huge 19.8% plunge in the previous quarter as lockdown measures affected activity.
People should consider that the third-quarter bounce marks the U.K.’s sharpest quarterly expansion since records began in 1955. However, GDP is still 9.7% below where it was at the end of 2019. This information came from the Office for National Statistics on Thursday. Unfortunately, compared with the third quarter of last year, GDP fell by 9.6%.
Interestingly, monthly growth slowed throughout the third quarter. Importantly, the GDP expanded by 6.3% in July, slowing to 2.2% in August as well as 1.1% in September, when it was driven by the professional, scientific, and technical industries.
The U.K. economy and risk factors
However, the situation is more complicated than it might appear at first glance. Importantly, England is under a month-long partial lockdown until at least December 2 due to a resurgence in coronavirus cases. It is worth mentioning that the recovery is expected to lose steam in the final three months of the year.
There is another important issue. The U.K. and the EU’s deadline to reach an agreement on their post-Brexit trading relationship is also rapidly approaching and people should be aware of this fact. Moreover, a “no-deal” scenario at the end of the year is widely expected to cause further economic disruption.
Importantly, U.K. Finance Minister Rishi Sunak announced the country’s furlough scheme’s extension until the end of March. As a reminder, the country’s furlough scheme, which subsidizes workers’ wages that are unable to due to the coronavirus pandemic, will help to improve the situation. Also, the Bank of England expanded its target stock of asset purchases to $1.2 billion. The U.K. economy expanded in the third quarter, but it won’t be easy to return to the pre-coronavirus period.
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