By David Milliken
LONDON (Reuters) – Britain’s economy grew 0.4% in August, leaving it just 0.8% smaller than it was in February 2020, just before the country went into its first COVID-19 lockdown, the Office for National Statistics said on Wednesday.
Economists polled by Reuters had forecast monthly gross domestic product growth of 0.5% for August.
July’s GDP was revised down to show a fall of 0.1% rather than growth of 0.1%, but other recent data revisions for earlier in the year make the economy much closer to its pre-pandemic size than when the last set of monthly GDP data was released.
The Bank of England looks on course to be the first major central bank to raise interest rates since the start of the pandemic. Financial markets bet on a rise to 0.25% by December.
Britain’s economy shrank by 9.7% in 2020, its joint-biggest drop in 300 years and matching the annual decline in 1921, when the economy was still reeling from the cost of World War One.
The International Monetary Fund forecast on Tuesday that Britain was on track to have the fastest expansion of any country in the G7 group of rich nations, growing 6.8% this year, although the outsize scale of last year’s slump means it will still take longer to recover than most of its peers.
Britain’s economy expanded rapidly in the first half of this year, when the fast initial roll-out of COVID-19 vaccines allowed lockdown restrictions to ease.
But this has slowed since mid-year due to a wave of cases of the Delta variant and global supply chain difficulties, which have been exacerbated by new post-Brexit restrictions on trade and immigration.
Wednesday’s data showed monthly growth picked up in August after a drop in July – when the impact of Delta on staff absence was greatest – but growth in the year to August slowed to 6.9%. Economists had forecast a slowdown to 6.7%.
(Reporting by David Milliken and William Schomberg, Editing by Alistair Smout/Guy Faulconbridge)
