Virus-hit UK economy stages stronger recovery

Britain's economy staged a stronger-than-expected bounceback in the second half of 2020, official data showed Wednesday, indicating a nascent recovery from the damaging coronavirus crisis.

Gross domestic product expanded by 16.9 per cent in the third quarter as the economy temporarily reopened from lockdown, the Office for National Statistics (ONS) said in a statement. That marked an upgrade from the prior estimate of 16.1-per cent growth.

And the economy grew 1.3 per cent in the fourth quarter despite renewed Covid restrictions, up on the earlier figure of 1.0 per cent. "At one time there had been strong belief that the fourth quarter would see a renewed economic contraction," noted EY economist Howard Archer.

"However, it is evident that lessons have been learned in keeping activity going amid Covid-19 restrictions. "Activity did however plunge by a bigger-than-expected 19.5 per cent in the second quarter as a result of Britain's initial lockdown.

The earlier estimate was put at 19 per cent.

As a result of the revisions, the ONS added that the UK economy tanked 9.8 per cent overall last year, which was a modest upgrade from 9.9 per cent.

However, that still represented Britain's biggest slump in three centuries -- and the worst performance among the G7 nations for last year.

The economy is now 7.3 per cent smaller than its pre-pandemic level, an upgrade from the previous estimate of 7.8 per cent.

Economist Ruth Gregory, at research consultancy Capital Economics, added that the second-half revisions mean that the economy  "does not have quite as far to recover from the Covid-19 crisis".

The Bank of England forecasts that UK economic growth will recover strongly this year towards its pre-Covid level as a result of the nation's rapid vaccination drive.

Pantheon Macroeconomics analyst Samuel Tombs on Wednesday said this was the factor behind the UK likely recovering  "at a faster rate than the eurozone this year".

Britain has suffered one of the world's worst coronavirus outbreaks, with more than 127,000 deaths.