Although the UK economy expanded in July, CW Holt analysts say the path to full recovery may be littered with obstacles.
Analysts at CW Holt Advisory have estimated that the UK economy grew by 6.6 percent in July as the country emerged from the lockdown that had seen the close of pubs and restaurants. Although the UK GDP remained 11.7 percent below the pre pandemic level, it was 18.6 percent above its April low.
The lifting of the lockdown measures that were put in place to curb the spread of the novel coronavirus caused activity in the food, services and accommodation sector to surge by 140.8 percent on a monthly basis in July.
The estimated growth in GDP, as announced by the Office for National Statistics was in line with expectations of economists at CW Holt Advisory who had predicted expansion of between 6.7 and 6.8 percent for July.
Economic recovery faces challenges, CW Holt Advisory
But although the UK economy appears to be on a path to steady recovery, CW Holt Advisory analysts have warned that it still has a long way to go, having lost almost half of its GDP since the start of the pandemic. Given that most of the lockdown restrictions were lifted by July, the scope for further increase in economic activity may be limited.
Chancellor Rishi Sunak welcomed the hefty growth in July but added that he was aware of widespread concern over job losses and that many Brits were still deeply worried about making ends meet in the coming months.
Unemployment continues to rise, and this will have a negative impact on consumer and business confidence as well as consumer buying power. In addition to this economic hurdle, economic stimulus is also being wound down.
The recent spike in new coronavirus cases, combined with uncertainty surrounding Brexit could mean that the road to further economic recovery could be mostly uphill.