NIESR said UK’s 0.8% GDP growth in May “disappointed”. It expected GDP growth of 0.9% in June, and 4.8% in Q2 overall. Nevertheless, “with catch-up potential still evident in hospitality, transport, business support and the arts, we forecast growth of 1.9 per cent in the third quarter, still notably above historical trend growth rates.” But, “much will depend on the roll-out and efficacy of the vaccines in the context of the Delta variant.”
“Like April, May’s GDP growth was faster than usual but almost entirely driven by the lifting of Covid-19 restrictions, with the hospitality sector accounting for 0.7 percentage points of May’s 0.8 per cent growth. Underlying growth is moderate outside the sectors being unlocked, with supply constraints contributing to the continuing recent stagnation in manufacturing. It remains to be seen whether the lifting of further restrictions in July contributes to a continuation of strong growth in the third quarter or – if cases of Covid-19 continue to rise – increased caution among consumers and even another national lockdown.”
Rory Macqueen Principal Economist – Macroeconomic Modelling and Forecasting
