Market News

UK economy surpassed pre-COVID size in late 2021, new data shows - REUTERS

SEPTEMBER 02, 2023

LONDON, Sept 1 (Reuters) - Britain's economy surpassed its pre-COVID-19 size in the final quarter of 2021, a much earlier recovery from the pandemic than previously estimated and ahead of other big European countries, revised official data showed.

The British economy was 0.6% larger in the fourth quarter of 2021 than in the final quarter of 2019, compared with an earlier estimate that it was 1.2% smaller, the Office for National Statistics (ONS) said on Friday.

This big upward revision brings forward the date at which Britain's economy regained its pre-COVID size by more than a year and a half, and shows at the end of 2021 it had made a faster recovery than Germany, France or Italy, and was level with Japan, although it was behind the United States and Canada.

Prime Minister Rishi Sunak's government has been criticised for a sluggish recovery by the opposition Labour Party ahead of a national election expected next year, and the latest revisions were welcomed by finance minister Jeremy Hunt.

"The fact that the UK recovered from the pandemic much faster than thought shows that once again those determined to talk down the British economy have been proved wrong," he said.

The changes also have implications for the Bank of England, which has a subdued growth outlook and has found it harder to tame inflation than the U.S. Federal Reserve or the European Central Bank.

In its last set of quarterly growth data, the ONS estimated that in the three months to the end of June 2023, Britain's economy was still 0.2% smaller than in the fourth quarter of 2019, the last full quarter before the start of the pandemic.

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This left Britain at the bottom of the Group of Seven advanced economies in terms of its recovery from the pandemic.

Other countries had not finished revising GDP, so it was not yet possible to have a definitive ranking of their economic performance during and after COVID, the ONS said.

In Friday's announcement - part of an annual revision process for British gross domestic product data - the ONS said annual growth for 2021 was revised up by 1.1 percentage points to 8.7%, while the slump caused by 2020's pandemic was revised down to 10.4% from 11%.

"These revisions are mainly because we have richer data from our annual surveys and administrative data, we are now able to measure costs incurred by businesses directly and we can adjust for prices at a far more detailed level," the ONS said.

Revisions for 2022 have not yet been published.

The ONS will publish another update to quarterly growth data, including for 2022, on Sept. 29 and its full annual set of data revisions will come on Oct. 31.

"These data changes are likely to lead to further revisions to the indicative estimates ... as well as impacts for our pre-pandemic level recovery of GDP," the ONS said.

Reporting by David Milliken, Editing by Kylie MacLellan and Alexander Smith


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