London Daily

Focus on the big picture.
Friday, Feb 20, 2026

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
UK Confirms Preferential U.S. Trading Terms Will Continue After Supreme Court Tariff Ruling
U.S. and U.K. to Hold Talks on Diego Garcia as Iran Objects to Potential Military Use
UK Officials Weigh Possible Changes to Prince Andrew’s Position in Line of Succession Amid Ongoing Scrutiny
British Police Probe Epstein’s UK Airport Links and Expand High-Profile Inquiries
Early 2026 Data Suggests Tentative Recovery for UK Businesses and Households
UK Introduces Digital-First Passport Rules for Dual Citizens in Border Control Overhaul
Unable to Access Live Financial Data for January UK Surplus Report
UK Government Considers Law to Remove Prince Andrew from Royal Line of Succession
UK ‘Working Closely with US’ to Assess Impact of Supreme Court Tariff Ruling
Trump Criticises UK Decision to Restrict Use of Bases in Potential Iran Strike Scenario
UK Foreign Secretary and U.S. State Chief Hold Strategic Talks as Tensions Rise Over Joint Air Base
Two teens arrested in France for alleged terror plot.
Nordic Fracture: How Criminal Scandals and Toxic Ties are Dismantling the Norwegian Crown
US Supreme Court Voids Trump’s Emergency Tariff Plan, Reshaping Trade Power and Fiscal Risk
King Charles III Opens London Fashion Week as Royal Family Faces Fresh Scrutiny
Trump’s Evolving Stance on UK Chagos Islands Deal Draws Renewed Scrutiny
House Democrat Says Former UK Ambassador Unable to Testify in Congressional Epstein Inquiry
No Record of Prince Andrew Arrest in UK as Claims Circulate Online
UK Has Not Granted US Approval to Launch Iran Strikes from RAF Bases, Government Confirms
AI Pricing Pressure Mounts as Chinese Models Undercut US Rivals and Margin Risks Grow
Global Counsel, Advisory Firm Co-Founded by Lord Mandelson, Enters Administration After Client Exodus
London High Court dispute over Ricardo Salinas’s $400mn Elektra share-backed bitcoin loan
UK Intensifies Efforts to Secure Saudi Investment in Next-Generation Fighter Jet Programme
Former Student Files Civil Claim Against UK Authorities After Rape Charges Against Peers Are Dropped
Archer Aviation Chooses Bristol for New UK Engineering Hub to Drive Electric Air Taxi Expansion
UK Sees Surge in Medical Device Testing as Government Pushes Global Competitiveness
UK Competition Watchdog Flags Concerns Over Proposed Getty Images–Shutterstock Merger
Trump Reasserts Opposition to UK Chagos Islands Proposal, Urges Stronger Strategic Alignment
Greek Prime Minister Kyriakos Mitsotakis advocates for a ban on minors using social media.
Liberal Senator Michaelia Cash Accuses Prime Minister of Lying to Australians
Meanwhile in Time Square, NYC One of the most famous landmarks
Jensen Huang just told the story of how Elon Musk became NVIDIA’s very first customer for their powerful AI supercomputer
A Lunar New Year event in Taiwan briefly came to a halt after a temple official standing beside President Lai Ching‑te suddenly vomited, splashing Lai’s clothing
Jillian Michaels reveals Bill Gates’ $55 million investment in mRNA vaccines turned into over $1 billion.
Ex-Prince Andrew Mountbatten-Windsor's arrested
Former British Prince Andrew Arrested on Suspicion of Misconduct in Public Office
Four Chagos Islanders Establish Permanent Settlement on Atoll
Unitree Robotics founder Wang Xingxing showcases future robot deployment during Spring Festival Gala.
UK Inflation Slows Sharply in January, Strengthening Case for Bank of England Rate Cut
Hide the truth, fake the facts, pretend the opposite, Britain is as usual
France President Macron says Free Speech is Bull Sh!t
Viktor Orbán getting massive praise for keeping Hungary safe, rich and migrant-free!
UK Inflation Falls to Ten-Month Low, Markets Anticipate Interest Rate Cut
UK House Prices Climb 2.4% in December as Market Shows Signs of Stabilisation
BAE Systems Predicts Sustained Expansion as Defence Orders Reach Record High
Pro-Palestine Activists Cleared of Burglary Charges Over Break-In at UK Israeli Arms Facility
Former Reform UK Councillors Form New Local Group Amid Party Fragmentation
Reform UK Pledges to Retain Britain’s Budget Watchdog as It Seeks Broader Economic Credibility
Miliband Defends UK-California Clean Energy Pact After Sharp Criticism by Trump
University of Kentucky to Host 2026 Summer Camps Fair Connecting Families with Local Programmes
×