UK economy grew in February with end of lockdown in sight | Brexit news

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The UK economy grew 0.4% in February compared to January, as businesses prepared for the lifting of a third coronavirus lockdown, official data showed which also showed a partial recovery in post-Brexit exchanges with the European Union.
Economists polled by the Reuters news agency expected growth of 0.6%.

However, the data also showed that the decline in gross domestic product (GDP) in January was not as severe as previously expected, down 2.2 percent from the initial reading of a decline of 2, 9 percent.

The UK economy shrank almost 10% last year, its biggest recession in more than three centuries and a more severe fall than in most European economies, as the country was hit by the coronavirus pandemic.

Data on Tuesday showed GDP remained 7.8% below its level a year earlier, shortly before the pandemic swept across Europe, and was 3.1% below its level October, before the last two lockdowns hammer home the UK’s huge service sector.

Yet a rapid deployment of COVID-19 vaccines has raised the prospect of a rebound this year and into 2022.

Relaxed restrictions

Non-essential shops and outdoor hospitality areas reopened on Monday and Prime Minister Boris Johnson hopes to ease most coronavirus restrictions before the end of June.

“While the UK is still on track for a modest first quarter GDP contraction, investors are increasingly looking to the next rebound in economic growth rather than dwell on the negative quarterly figure Dean Turner, Economist at UBS Global Wealth Management, mentioned.

Growth in February was helped by a first rise in industrial production since November, led by auto manufacturing after two months of contraction as the industry struggled with a global shortage of microchips.

Wholesalers and retailers saw their sales increase, which helped the service sector grow 0.2%.

Post-Brexit recovery

There were signs that trade between Britain and the EU partially recovered in February after a blow in January, the first month of a new post-Brexit trade relationship.

British goods exports to the EU, excluding non-monetary gold and precious metals, were 41.4% below year-ago levels in January, but partially recovered for to be 12.5% ​​below levels a year ago in February. Imports, which fell 19.2% from a year ago levels in January, were 11.5% lower than a year ago levels in February.

Trade volumes between Britain and the EU increased at the end of 2020, as companies stockpiled goods in anticipation of border delays in 2021.

“Despite evidence of a partial recovery from January’s substantial drops in some commodities, it is still too early to determine to what extent the monthly trade changes for January and February can be directly attributed to the end of the period. transition, ”he added. mentionned.

The first signs of pent-up demand emerged on Monday as consumers flocked to stores that were allowed to open for the first time in nearly 100 days, as well as pubs and restaurants that have space to serve in. outside.

The return of non-essential stores is the latest step in a plan Prime Minister Boris Johnson hopes to see all remaining curbs removed by June 21. The first step was the reopening of schools on March 8, and there are signs that economic activity has picked up in March. A key purchasing manager index has gone well above the 50 level that separates contraction from expansion.

Economists say Britain could experience a consumer boom if only a fraction of excess savings are released, and the chief economist at the Bank of England sees a risk of unwanted inflation.

Falling infection rates and a rapid vaccination program boost confidence the UK can avoid another lockdown. More than 60 percent of adults have been vaccinated, the most of any major economy.

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