Accommodation and food services were one of the few bright spots, expanding 71.4% in August as consumers made extensive use of the government’s “Eat Out to Help Out” program, which subsidized 100 million meals at restaurants, cafés and pubs, according to the Centre for Economics and Business Research.
But gains elsewhere were unimpressive. In construction, output rose by 3% leaving it almost 11% below its pre-crisis peak, while manufacturing grew just 0.7%.
Government support for workers, businesses and homeowners is also unwinding from the end of October, which likely means more job losses and weaker consumer spending. UK companies already shed nearly 700,000 jobs between March and August, and the Bank of England warned in August that 2.5 million people could be out of work and looking for jobs by the end of the year.
“With the government’s fiscal support unwinding, the next few months will almost certainly be worse,” Ruth Gregory, senior UK economist at Capital Economics said in a research note.
“The big risk now is more restrictions and a no deal Brexit send the recovery into reverse,” Gregory added.
“A long-lasting recovery is by no means assured,” Rain Newton-Smith, chief economist at the Confederation of British Industry, the main business lobby, said in a statement. “While necessary, the combination of restrictions re-introduced in September and rising infections will be weighing on already fragile business and consumer confidence,” she added.