UK’s economic recovery may be hit by the pingdemic

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Economists believe the Office for National Statistics will say that GDP grew 0.7 percent in June, which would take growth for the quarter to 4.7 percent.

The easing of coronavirus restrictions began in April and helped the economy return to growth, after contracting 1.6 percent in the January to March quarter. 

Paul Dales, chief UK economist at Capital Economics, noted that although growth in the services and construction sectors more than offset a fall in industrial output during the quarter, the economy is still below pre-pandemic levels.

He added that with the manpower shortages and disruption caused by the surge in people being contacted by the NHS app and told to isolate, the recovery could weaken and result in third quarter growth coming in below the Bank of England’s forecast of 3.9 percent.

“We suspect the pace of the recovery slowed in June, with GDP rising by just 0.7 percent month on month,” he said. “The risk is that the ‘pingdemic’ hit activity in July, causing the recovery to stall.”

ING developed markets economist James Smith said: “We suspect activity over the summer may be a little more lacklustre given the recent dataflow ‑ we’re forecasting 1.5 percent growth in the third quarter.”

Bank of America Merrill Lynch UK economist Robert Wood warned the UK’s return to economic normality and its pre-pandemic size will be gradual.

“The economy has made major strides this year. Second quarter output will likely be 22 percent higher than a year earlier. But that leaves output still a normal-sized recession below pre-Covid levels,” he said. “Final steps in closing the Covid-19 losses could be the hardest.”

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