British economy strengthens in April as virus lockdown eases

Britain’s economy gathered pace in April as the government eased its coronavirus lockdown, official data showed on Friday, with finance minister Rishi Sunak cautiously welcoming the 2.3-per cent growth figure as the Delta variant spreads.

It was the fastest monthly output for UK gross domestic product since July last year “as government restrictions affecting economic activity continued to ease”, the Office for National Statistics (ONS) said in a statement.

Britain’s economy had contracted 1.5 per cent overall in the first quarter, although had already begun to bounce back strongly in March with GDP of 2.1 per cent.

The UK’s overall output for April remains 3.7 per cent below pre-pandemic levels seen in February last year.

“Overall, the economic recovery stepped up another gear in April and GDP is on track to return to its February level before the end of the year,” noted Thomas Pugh, UK economist at Capital Economics research group.

“If anything, the economy could regain its pre-crisis level even sooner.” April’s growth was driven by the service sector, which jumped 3.4 per cent as consumers once again started to visit non-essential physical stores, restaurants and bars and as more children returned to onsite lessons, the ONS said.

Output in the production sector however dropped 1.3 per cent during the same month, recording the first fall since January.  And construction contracted 2.0 per cent following a strong March.

Since May, the government has further eased restrictions, with people now allowed to eat and drink inside restaurants and bars, having initially been able to sit only outside.

“Today’s figures are a promising sign that our economy is beginning to recover,” said Chancellor of the Exchequer Sunak.

His cautious response comes amid mounting concerns over whether the emergence of the Delta variant of the coronavirus threatens the UK government’s provisional June 21 deadline for further lifting virus restrictions. The Delta variant, which first emerged in India, is now the dominant strain in the UK, according to Public Health England figures.

And the UK government on Friday said it is 60 per cent more transmissible in households than the variant that forced the country to lock down in January. Britain on Thursday said G7 leaders will agree to expand global Covid vaccine manufacturing to provide at least one billion doses to the world through sharing and financing schemes.

The UK, which is hosting the big powers’ gathering in southwest England, added it would donate at least 100 million surplus doses within the next year, including five million beginning in the coming weeks.

The announcement came after the United States said it would donate 500 million jabs to 92 poor and lower-middle-income nations.

Separate data Friday showed UK exports fell 0.6 per cent in April after two months of growth, with drops in exports to non-EU countries offsetting increases to nations within the bloc, the ONS said.

While exports to the EU rose 2.3 per cent month-on-month, they remained 9.0-per cent below 2019’s average level, or ahead of Britain’s formal exit from the European Union at the start of this year, according to Samuel Tombs, chief UK economist at Pantheon Macroeconomics.