Home Business Britain's bounceback starts: New figures show economy grew by 2%

Britain's bounceback starts: New figures show economy grew by 2%

The economy grew by almost two percent in May, the point at which Boris Johnson first started to ease the draconian restrictions. Experts said the GDP boost, although muted, is a positive step which shows recovery is on the horizon as the country returns towards business as normal. The growth was fuelled by surging retail sales and the repair of motor vehicles, according to the Office for National Statistics (ONS).

In May, the retail industry grew by 12 percent thanks to strong sales in non-food stores and a record proportion of online sales.

The ONS also said the economy eked out growth as manufacturing and house building showed signs of recovery after restrictions began to be lifted.

The all-important services sector grew by 0.9 percent in May, while manufacturing rose 8.4 percent and construction by 8.2 percent as factories and building sites started to get back on stream.

Chancellor Rishi Sunak welcomed the return to economic growth but cautioned that there will be a long road to recovery.

“Today’s figures underline the scale of the challenge we face. I know people are worried about the security of their jobs and incomes,” he said.

“That’s why I set out our Plan for Jobs last week, following the PM’s new deal for Britain, to protect, support and create jobs as we safely reopen our economy.”

“Our clear plan invests up to £30 billion in significant and targeted support to put people’s livelihoods at the centre of our national renewal as we emerge through the other side of this crisis.”

Despite the uptick GDP has not yet recovered from record falls in March and April and is still down 24.5 percent compared to pre-coronavirus levels in February.

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May’s data has raised concerns the recovery will be slower and more drawn out, suggesting a V-shaped rebound may not come to pass.

Jonathan Athow, deputy national statistician at the ONS, said: “In the important services sector we saw some pick-up in retail, which saw record online sales.

“However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”

Most economists think the recovery will gather pace during the summer when more lockdown restrictions have been eased.

In June, shops selling items considered non-essential such as books and shoes reopened, followed in early July by the reopening of much of the hospitality sector, including pubs and restaurants.

But others have warned that a full recovery will take “years not months”.

The economic growth figures come as the government revealed that Bounce Back Loans worth £31.7 billion have now been approved for small businesses amid the coronavirus crisis.

New figures from the Treasury show that 1.05 million of the payments have been given the go-ahead.

The data also shows that 54,538 Coronavirus Business Interruption Loans (CBILs) have been approved, providing £11.85 billion worth of funding since the scheme was launched on March 23.

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Meanwhile, 412 Large Business Interruption Loans, worth £2.73 billion, have been endorsed.

The Treasury added that 9.4 million jobs have been furloughed – unchanged from last week – as firms claimed £28.7 billion to keep workers in employment.

The update comes after Chancellor Rishi Sunak’s summer statement last week saw him unveil a Job Retention Bonus scheme, which will give £1,000 to firms for each furloughed employee they bring back to work.

The payment will be given to companies if they keep the employee in work until January.

Mr Sunak’s Plan for Jobs was unveiled amid mounting fears of mass unemployment when the furlough scheme comes to an end in October.

At least 150,000 jobs have already been cut or put at risk at more than 60 major British employers during lockdown.

Overall, around 75,000 job losses were announced last month alone.

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