London Daily

Focus on the big picture.
Thursday, Oct 08, 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
English Councils Push Government to Rethink Proposed Funding Cuts
Scottish Homebuilding Falls to Lowest Level in 11 Years
BBC Chief Matt Brittin Defends Restructuring as Staff Challenge Job Cuts
UK Finance Warns High Energy Costs and Bond Yields Are Complicating Fiscal Outlook
UK Adopts All 44 Recommendations on Regulating AI in Healthcare
Chancellor John Healey Prepares Autumn Budget as Borrowing Costs Strain Public Finances
UK Investigators See Strong Indications of Iranian Link After RAF Fairford Security Operation
Laura Trott Pledges Tighter Controls on Political Activism in UK Classrooms
Welsh Ministers Launch Long-Term Review of North Wales and Anglesey Crossings
Welsh Government Orders 18-Month Study of Road Solutions Around Newport
Reform UK MP Sarah Pochin Faces Scrutiny Over £800,000 Second Home Purchase
British Households Grow More Concerned About Fuel and Energy Prices
NHS Leaders Warn of Rising Winter Pressure on Emergency Departments
Kemi Badenoch Proposes £2.3 Billion Employer National Insurance Cut for Young Workers
Middle East Conflict Could Erase UK Fiscal Headroom, Economists Warn
Manchester City Found Guilty of Multiple Premier League Financial Rule Breaches
UK Security Services Find Strong Indications of Iranian Role in RAF Fairford Incident
Costa Coffee Returns to Operating Profit on Iced Drinks and Menu Changes
Asos Warns Customers After Unauthorized Access to Retail App and Data
Kemi Badenoch Puts Growth and Deregulation at Center of Conservative Conference
Campaigners Warn of Deepening Social Care Crisis for Disabled Adults
Study Finds Rising Early-Onset Cancer Rates Among Adults Under 50 in Britain
UK Coach Operators Warn High Diesel Prices Could Force Route Cuts
FCA Opens Independent Review Into Handling of Epstein-Linked Whistleblower Case
Argentina Vows to Block Falkland Islands Offshore Oil Development
UK Chancellor Prepares Fiscal Measures and Welfare Reforms Ahead of Autumn Budget
Sainsbury’s and Morrisons Explore Potential Multi-Billion-Pound Merger
UK Weighs Tariffs on Chinese Electric Vehicles to Align With European Union
UK Threatens Diplomatic Expulsions Over Planned Closure of East Jerusalem Consulate
UK Energy Price Cap Hits Three-Year High as Middle East Conflict Raises Costs
Seventh Arrest Made in Suspected Terror Plot at RAF Fairford
Systemic Education Collapse Sparks Mass Student Uprisings in France
Green Party Faces Backlash Over Resolution Equating Zionism With Racism
Conservatives Debate Scrapping Environmental Rules for New Homes
Cornwall Insight Warns UK Energy Bills Could Approach £2,000 This Winter
UK Coach Operators Warn of Service Cuts as Diesel Prices Exceed £2
Scottish Parliament Approves £68 Billion Budget With New Tax and Property Measures
FCA Opens Independent Review Into Handling of Epstein Whistleblower
UK Government Drops Plan to Suspend Jury Trials in England and Wales
Bank of England Holds Interest Rate at 3.75% as Markets Watch November
Two Iranian Nationals Charged Over Alleged Plot Targeting Manchester Jewish Community
UK Fiscal Headroom Halves to £11 Billion Ahead of Budget, EY Warns
US Bomber Withdrawal From RAF Fairford Prompts UK Security Review
Sarah Wakfer Appointed Chair of Northern Ireland’s Health and Care Regulator
Scotland Housing Completions Fall to 11-Year Low Amid National Shortage
UK Water Companies Face Tougher Oversight and Unannounced Regulatory Inspections
Middle East Conflict Pushes UK Fuel and Wholesale Energy Prices Higher
Andy Burnham Raises Prospect of Second Brexit Referendum in Review of UK-EU Relations
EY Warns UK Fiscal Headroom Has Halved to £11 Billion Ahead of Autumn Budget
BT Accused of Pressuring Vulnerable Customers During Digital Landline Shift
×