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The Near-Stagnant Progression of the UK Economy

  • April 12, 2022
The Near-Stagnant Progression of the UK Economy
 

As a result of a steep fall in the production of computer goods and cars has resulted in the UK’s economic growth taking a hit and slowing down in February.

The increase in the economy stood at a weak 0.1% in February compared to the 0.8% rise the month before, according to the Office for National Statistics (ONS).

However, the ONS also stated that the UK economy is currently 1.5% higher than it was before the Covid-19 pandemic swept across the nation in February 2020.

Despite this fall in manufacturing in these areas, there was still growth seen in other areas like tourism and travel - meaning the hit on the economy was not as awful as it could have been.

Even though these sectors did ultimately leave the country with a positive economic difference, it did not do enough to match the previous predictions that economists had made about the month.

The predicted GDP was supposed to increase by 0.3% in February as a result of the Covid restrictions being removed across England in January.

Though, as Ruth Gregory (senior UK economist at Capital Economics) reiterated, after the post-Omicron bounce had faded paired with the squeeze added onto household incomes tightened, the pace of the UK economic recovery was already slowing.

Though the rate at which it slowed was unpredictably fast, defying everything that economists had predicted.

Though they weren’t much, Chancellor Rishi Sunak has claimed that he has ‘welcomed’ the figures from February as a result of the impact that Russia’s invasion of Ukraine has created upon the UK economy.

This is still a victory for the UK, a small one but a victory nonetheless. The UK is able to not completely crumble over these tough financial circumstances.

The manufacturing of cars and computer goods being hard hit is not only seen in the UK’s economy, other European economies have been coming up short here too as a direct result of a semiconductor shortage.

Not only are these areas hit hard by production issues, but it will also be hit with the high energy prices that the rest of the country are facing and so could hinder the possibility of future data releases.

Those in the service sector were the shining light for the UK economy, there has been a growth in accommodation, travel agencies and tour operators.

The sudden increase in these profits is likely a result of how little utilised they were whilst people were unable to do everything that they had wanted during the pandemic. Now that the Covid restrictions have been lifted, people are able to go out and spend their money on whatever they want now, from eating out to going to the theatre etc.

As this complete easing of the rules is still quite fresh in the UK, it is predicted that these sectors will likely grow even more.