Recovery continues to slow in the UK. The Office for National Statistics (ONS) revealed the UK economy grew by just 0.4% in October. The country had been on the road to recovery after the record slump earlier this year. But recovery is slowing, and the ONS expects output to shrink again in November.
The first coronavirus lockdown caused the UK economy to contract by a record 19.5% in April. The initial rebound was strong. During the period from August to October, the UK economy grew by 10.2% compared to the previous three months. But the reintroduction of restrictions caused the growth rates to slow down. In September, UK growth stood at 1.1%, slipping to 0.4% in October.
*Starling Bank will not charge you withdrawal or currency conversion fees, but some ATMs may charge a fee.
**On top of this amount, some ATMs may charge a fee
Services sector hit hard
Growth rates slowed down in sectors hardest hit by the restrictions. While car manufacturing and retail grew, services sector growth nearly stalled. Services were up by 0.2% with positive signs shown in the healthcare sector. However, hospitality saw the largest falls, which caused the whole economy to grow modestly. The hospitality sector suffered from the reintroduction of restrictions, including the introduction of the 10 pm curfew.
The second UK lockdown happened in November, and economic growth is unlikely to rebound anytime soon. Much of England continues to face restrictions, dragging any prospect of growth into the new year. Businesses are also starting to warn about the negative impact a no-deal exit from the EU after the transition period ends at the end of the year could have for trading.
Road to recovery could be bumpy
Growth is set to continue to slow down, as further restrictions took place in November. The British Chambers of Commerce's head of economics, Suren Thiru, predicts "a significant contradiction in economic activity in November".
Official forecasts predict the UK economy to shrink by 11.3% this year. The decline would be the biggest in 300 years. The Office for Budgetary Responsibility (OBR) doesn't expect the UK economy to recover back to pre-crisis size until the end of 2022. Experts are warning the recovery could take longer if there is no Brexit deal at the end of the year.
The government also has to keep an eye on a looming jobs crisis. UK unemployment figures continue to surge. Redundancies are at a record level with 314,000 workers losing their job in the three months to September, according to the ONS. Unemployment is expected to rise to 7.5% by mid-next year. The government has extended the furlough support scheme in efforts to slow down the rising unemployment figures.
Recovery could pick up thanks to the recent vaccination news. However, restrictions are likely to occur until there is a mass rollout of the vaccine. Experts say this could still be months away.
