London Daily

Focus on the big picture.
Wednesday, Aug 05, 2026

UK economy continues recovery in July

UK economy continues recovery in July

The UK economy grew by 6.6% in July, according to official figures, but output remains far below pre-pandemic levels.

It is the third month in a row that the economy has expanded.

But the Office for National Statistics (ONS) said that the UK "has still only recovered just over half of the lost output caused by the coronavirus".

Hairdressers, pubs and restaurants contributed to growth after companies were allowed to reopen in July.

However, the UK's economy is still 11.7% smaller than it was in February and growth in July was slower than the 8.7% expansion seen in June.

Thomas Pugh, UK economist at Capital Economics, said the reopening of restaurants and pubs meant the accommodation and food services sector "rose by a whopping 140.8%" between June and July.



However, activity in this sector was 60.1% below the level recorded in February.

And while Mr Pugh expects the Eat Out to Help Out scheme to provide a further boost in August, "now that most sectors in the economy are open again there is little scope for further large rises in monthly GDP".



Up, up, but not away. The UK economy continued a sharp recovery from lockdown in July, growing by a bumper 6.6% in the month. But the rate of recovery was a little slower than in June, raising some concerns about the ongoing strength of the bounce back.

The economy is still nearly 12% smaller than before the pandemic crisis, and has recovered just over half of the lost output during the shutdowns.

While the third quarter is on course to see a record number for growth and the official end of recession, fears remain that the recovery could peter out.

Business groups continue to push for extensions to government support packages that are due to close. The figures in July reflected the partial reopening of retail, manufacturing, and some public sector activities such as schools.

The UK fell into recession after activity shrank for the first and second quarters of this year after the government announced a lockdown to stop the spread of the coronavirus.

Mr Pugh questioned how strong the UK's recovery would be throughout the rest of the year.

"Talk of tax rises at the next Budget, a further deterioration in the Brexit negotiations and a worrying rise in the number of virus cases and tighter social distancing restrictions will all conspire to slow the recovery even further," he said.


Hairdressers contributed to economic growth in July after being allowed to reopen


Dean Turner, economist at UBS Global Wealth Management, forecasts that it will take until the end of 2021 before the UK recovers to pre-pandemic levels.

"Even with a managed exit from the Brexit transition agreement, it is unlikely that the lost output would be recovered before the end of next year," he said.

"The latest twist in negotiations raises the prospect that any recovery may take longer."

Meanwhile, the Coronavirus Job Retention Scheme is due to end on 31 October.

Former prime minister Gordon Brown, warned that ending the furlough scheme was a "cliff-edge" that could trigger "a tsunami of unemployment".

"The government's got to change course here," he told the BBC's Today programme.

Mr Brown called on the government to introduce a short-time working scheme, such as those in France and Germany. This would allow firms to reduce employees' working hours while keeping them in jobs, with the state topping up their salaries.

"You have got to send a signal that unemployment matters," he said. "We don't want to destroy any more capacity and skills in the economy."


Cars, alcohol and 'staycations'


The reopening of pubs and restaurants in July boosted the alcohol industry by 32.7% while the car sector saw demand return to pre-pandemic levels.

"Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time," said Darren Morgan, director of economic statistics at the ONS.

"All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover."

Keeping youngsters occupied while at home also continued to boost demand for toys and games, said the ONS, while holidaying in the UK supported campsites, cottages and caravan parks "because of a large increase in staycations".

Newsletter

Related Articles

0:00
0:00
Close
Lightning Strike Kills Yala FC Player During Match in Southern Thailand
Senate Scrutinises AI-Driven Personalised Pricing
Spain Seeks Mainland Transfers for 1,100 Children Stranded in Ceuta
UK Government Pushes New Procurement, Skills and Technology Policies Amid Economic Pressure
UK Charity Commission Investigates Donations Linked to Israeli Settlement Groups
UK Government Faces Pressure Over Possible Windfall Tax on Bank Profits
South East Water Provides Emergency Support After Kent Supply Disruptions
UK Defence Supports US Operation to Seize Russian-Flagged Oil Tanker in North Atlantic
Green Party Wins First Westminster By-Election Seat in Historic Gorton and Denton Victory
UK Farmers Face Rising Bluetongue Disease Cases Among Sheep Flocks
UK Government Warns Retailers and Fuel Suppliers Against Exploiting Price Pressures
Apple, AI Deepfakes and New UK Rules Highlight Growing Digital Regulation Challenges
UK Education Department Expands Fully Funded Apprenticeships for Under-25s
National Crime Agency and Spanish Police Arrest Scotland’s Most Wanted Fugitive in Madrid
UK Labour Government’s Devolution Plans Renew Debate Over Written Constitution
EY UK Forecasts Weak Growth in 2026 as Energy Risks Continue to Pressure Households
Apple Challenges UK Government Demand for Access to Encrypted iCloud Data
UK Government Considers Public Inquiry Into Jeffrey Epstein Network and Institutional Links
Cabinet Office Reforms UK Government Procurement Rules to Prioritize Local Jobs and Skills
UK Energy Security Faces Pressure From Middle East Conflict and Red Sea Disruptions
UK Government Expands Employment Discrimination Review Amid Labour Market Changes
UK Campaigners Call for Ban on Toxic Flea Treatments Linked to Water Pollution
MI6 Ranked Europe’s Leading Foreign Intelligence Service in Independent Review
Houthi Missile Attack on Saudi Oil Tanker Raises Further Red Sea Shipping Concerns
Palantir Faces UK Tax Criticism After Paying Two Million Pounds in Corporation Tax
Advanced AI Models Show Unexpected Behaviour During UK Cybersecurity Testing
Bank of England Introduces Tougher Artificial Intelligence Testing Rules for Financial Firms
Next Raises Annual Profit Forecast to One Point Two Four Billion Pounds After Strong Summer Sales
New UK Visa Rules Tighten Skilled Worker, Student and Family Migration Routes
UK Government Proposes New Equal Pay Enforcement Powers for Employers
UK High Court Blocks Home Office Deportation Policy for Alleged Trafficking Victims
UK Health Secretary Yvette Cooper Announces Major Reform of NHS Maternity Services
BP Reports Four-Year High Quarterly Profit of Five Point Seven Billion Dollars Amid Energy Market Turmoil
Bank of England Holds Interest Rate at Three Point Seven Five Percent as UK Growth Remains Weak
Spain and Morocco Trade Blame After 72,000 Migrants Enter Ceuta
Met Police Investigated Journalist Who Questioned Cambridge Professor
Badenoch Defends Tory Candidate Jailed for Antisemitic Abuse of Luciana Berger
NHS Spends £240m a Year Storing Paper Records Despite Digital Push
Apple Seeks Court Order to Stop OpenAI Using Alleged Trade Secrets
Breaking With the Past: One of the World’s Smallest Countries Changes Its Name
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Comcast: Tied to a Chair and Hit in the Face With Cake: The Regular Humiliation Ritual at the US Corporate Giant
Aston Martin Faces Legal Threat Over £550m Rescue Deal
Conservative Party and Reform UK Face Growing Scrutiny Over Political Transparency
GMB and Public Sector Unions Prepare for Wider Debate Over Government Priorities
UK Government Faces Pressure to Address National Water Infrastructure Failures
NHS Radiographers Report Rising Racist Abuse From Patients
Breast Cancer Experts Call for Overhaul of NHS Diagnostic Approach
UK Government Reviews Prison Policy After Debate Over Capacity and Public Safety
Nigel Farage Faces Questions Over Leadership Discussions and Five Million Pound Donation
×