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Highlights
- The Office for National Statistics (ONS) revised the UK economy’s gross domestic product growth rate to 1.1% for the third quarter from the previous estimate of 1.3%.
- The largest contribution to the GDP number came from the hospitality industry, followed by entertainment, arts, and recreation segments.
During the third quarter of 2021, the British economy witnessed a slower recovery than the earlier estimate. The Office for National Statistics (ONS) revised the gross domestic product growth rate for the UK economy to 1.1% from the previous estimate of 1.3%, which indicates that despite the ease in the Covid-19 restriction, the UK economy was slower to recover. Also, the revised data doesn’t count the most recent month statistics when the Omicron variant cases rose in the country.
The largest contribution to the GDP number came from the hospitality industry, followed by entertainment, arts, and recreation segments. The ease in Covid-19 restriction and reopening of restaurants, pubs, theatres, and other leisure activities during the period contributed to the GDP number as people increased their spendings on leisure and recreational activities.
On the other hand, the construction and production segment declined after performing exceptionally well during the second quarter. The decline was mainly due to weak electricity and gas compared to high levels in May 2021.
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Around eight manufacturing sub-sectors reported a fall during the period. Production output in the automotive industry declined for the third consecutive quarter. However, the fall was smaller than the first two quarters, indicating that the semiconductor shortage issue is slowly getting resolved.
The household consumption was revised upward to 2.7% during the period, while the household savings ratio declined to 8.6% from 10.7% in the second quarter of 2021. The UK household saved less during the third quarter following the reopening of economy, leading to a slight rise in spendings. In addition, the UK economy witnessed a fall in exports and a surge in imports leading to a negative contribution from net trade.
As per the revised estimates, the UK GDP is now 1.5% below the pre-pandemic period, which is an improvement compared to an earlier forecast of 2.1% below the pre-pandemic levels.
Gross Domestic Product (GDP) gauges the market value of all the finished goods and services produced within the country and gives an overall outlook on the country’s economic performance. Although there are different approaches for calculating the GDP number, the UK authority uses the Expenditure approach to estimate the GDP number. In this approach, the GDP figure is calculated by adding together consumption, government spending, investment, and net exports.
