London Daily

Focus on the big picture.
Friday, Aug 01, 2025

UK economy rebounds as Covid restrictions ease

UK economy rebounds as Covid restrictions ease

The UK economy grew by 4.8% between April and June, according to official figures, as most businesses emerged from lockdown.

Data from the Office for National Statistics showed that the expansion in gross domestic product (GDP) was fuelled by retail, restaurants and hotels.

Education also boosted the economy as schools reopened in the second quarter.

However, the figure was slightly below the 5% the Bank of England expected.

The UK economy is now 4.4% smaller than it was before the pandemic.

Growth in the second quarter contrasts with the first three months of the year, when the economy shrank by 1.6% while Covid restrictions were still in place.

Chancellor Rishi Sunak told the BBC: "Today's figures show that the economy is recovering very strongly, exceeding many people's expectations.

"But I'm not complacent. The economy and our public finances have experienced a significant shock. It is going to take us time to fully recover from that."


Capital Economics said it expected the economy to return to pre-Covid levels later this year.

"We are comfortable with our view that monthly GDP will return to its February 2020 pre-pandemic size by October and that the economy may yet surprise most forecasters by emerging from the pandemic without much scarring," said senior UK economist Ruth Gregory.

In April, non-essential retailers reopened, as well as gyms, hairdressers and outdoor dining. In May, pubs, restaurants and cafes were allowed to serve customers indoors, while theatres, galleries and cinemas were allowed to open their doors.

The main driver of growth was consumer spending, which rose by 7.3% over the quarter, ahead of expectations.


The UK is not just a nation of shopkeepers, but social animals. And it's that large proportion of "social spending" - on hotels, restaurants and leisure - that made our economy so vulnerable to lockdowns. The UK was the fastest shrinking of the G7 nations in 2020 and conversely, maybe one of the fastest of the big players to recover in 2021 as restrictions lift.

The consumer has led the way, driving output to within 5% of pre-pandemic levels, despite the Delta variant of Covid. It's growth that some feared just months ago would take far longer to materialise.

But what happens next is still uncertain. The safety net that has protected livelihoods - the furlough scheme - ends in October. Economists think there will be some job losses, albeit far fewer than assumed a year ago.

The biggest risk, however, will come from further variants and a resurgence in infections and restrictions. Policymakers are assuming we're done with the latter. A year ago, they were predicting there'd be no more national lockdowns: let's hope they're right this time.

If so, the impressive vaccination rate in the UK should stand the economy in good stead - others are not that fortunate. Be it health or wealth, it's access to vaccinations that may increasingly make the difference between the haves and have-nots as we try to escape the grip of this pandemic.

At the end of the quarter in June, the monthly growth is estimated at 1%, slightly more than most economists expected.

Pantheon Macroeconomics said that nearly half of the economic expansion in June came from activity in the health sector, "reportedly due primarily to a surge in people visiting their GP".

Hargreaves Lansdowne said: "Fears that the arrival of the Delta variant and the 'pingdemic' that followed might impact growth have so far not really materialised."

However, the ONS revised down its figure for May from 0.8% to 0.6% during a month of heavy rainfall.

The UK economy has been supported by the government's wage support scheme. But from July, employers have had to make contributions to staff wages and the scheme is set to close by the end of September.

'It's been very tough'


The economy is rebounding, but the pandemic is still having an impact on the restaurant trade, according to Asma Khan, founder and owner of Darjeeling Express, a family-owned Indian restaurant in London's Covent Garden.

"It's been very tough," she told the BBC. "The insecurity has been very hard to deal with, the way the lockdown happened in March of last year."

Mrs Khan said that she was "grateful" for the furlough scheme which allowed her to keep her entire staff on.

Even so, "I was still liable for all the rents and all the financial costs mounted up," she added.

There is, however, "a lot of optimism", Mrs Khan said. People are booking months in advance to dine at her restaurant, which recently welcomed comic actors Paul Rudd, of the US, and Canadian Dan Levy.

Asma Khan (L) recently welcomed US actors Paul Rudd (R) and Dan Levy (C) to Darjeeling Express

"We had, I think, 1,300 bookings in five hours when we started opening all up all the other dates," she said.

Mrs Khan said the changing nature of the UK's travel restrictions remained a concern. She said businesses like hers in central London were "completely dependent on tourists".

"People are worried because this whole insecurity of the red list, the amber list. This fluctuation is basically deterring a lot of people, except the very brave, to want to come in because they don't know whether the status of their country is going to change by the time they're ready to go back."

Following the release of second-quarter GDP figures, Mr Sunak said the UK had "the fastest quarterly growth rate among the G7 economies".

But Pantheon Macroeconomics said: "The UK economy almost certainly was the hardest hit by Covid-19 in the G7."

While UK GDP is still 4.4% smaller than its pre-pandemic level, the US has seen its economy recover, making it 0.8% larger than before Covid.

Pantheon also said France's economy was 3.3% below pre-pandemic levels, Germany was 3.6% below and Italy's GDP was 3.8% lower.

Japan and Canada have yet to report up-to-date figures, but Pantheon said: "Both economies had fared much better than the UK in previous quarters."

Newsletter

Related Articles

0:00
0:00
Close
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
×