GDP grows 15.5% during Q3 as economy rebounded from first lockdown

UK gross domestic product (GDP) is estimated to have grown by a record 15.5% during the third quarter of 2020 as lockdown measures eased, the Office for National Statistics (ONS) has revealed.

This was the largest quarterly expansion in the UK economy since the ONS quarterly records began in 1955.

However, the ONS noted that this latest figure reflected the continued easing of lockdown restrictions across the UK between July and September, as well as some recovery of activity from the steep contraction recorded in April.

While the latest figure followed the record contraction over Q2, from April to June, the level of GDP in the UK is still 9.7% below where it was at the end of 2019. Compared with the same quarter a year ago, the UK economy fell by 9.6%.

Furthermore, the monthly path of GDP during Q3 showed that following a rebound in July, there was a slowdown of growth in August and September as momentum began to ease through the quarter.

AJ Bell financial analyst, Laith Khalaf, commented: “A strong rebound in the economy is clearly positive, but we should keep the champagne on ice for now. The summer boom was turbo-charged by the Eat Out to Help Out scheme, while the furlough scheme worked its magic by keeping unemployment under wraps. But if you shut down an economy and then open it up, it’s not hugely surprising that you get a huge seesaw effect in quarterly GDP numbers.

“A swollen summer of economic activity hasn’t repaired the damage done in the first half of year though and the new lockdown means the UK can expect to end 2020 significantly behind where it started. The Bank of England estimates an 11% contraction in the economy over the course of the year.

“News of a potential vaccine makes the climb back look a lot less daunting, not only because it offers the prospect of a brighter future, but also because it gives businesses and individuals greater confidence in the here and now.

“Things also look like they will get worse before they get better, with rising unemployment on the cards over the course of the winter. January is a prime month for insolvencies, and failed Brexit negotiations could also give the economy an unhelpful shove in the wrong direction.”

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