UK economy bounced back from Covid, ONS revisions reveal


Britain’s economic performance since the start of the Covid-19 pandemic was much better than previously thought, the Office for National Statistics said on Friday as revised figures added nearly 2 per cent to the size of the economy.

The changes mean that by the end of 2021, the UK economy was 0.6 per cent larger compared with pre-pandemic levels instead of 1.2 per cent smaller, as previously estimated.

Simon French, chief economist at UK investment bank Panmure Gordon, said the revisions were “extraordinary”, adding: “The entire UK economic narrative — post-pandemic — has just been revised away.”

The revisions suggest the UK no longer has the worst growth record among G7 countries since 2019. They are also likely to show Britain performing better than Germany, Europe’s biggest economy, once they are included in official figures in October.

Treasury officials were buoyed by the ONS update, saying it “changes the picture [of the poorly performing UK economy] significantly”.

The Office for Budget Responsibility will need to take the new data into account as it prepares forecasts to accompany the government’s Autumn Statement.

But it is unclear whether the fiscal watchdog would expect the revisions to have a big effect on the public finances, since they do not alter official tax receipts or public spending data.

In 2022, all the revisions were downward, with the UK appearing to slide down international league tables. But this year the revisions have more than reversed those declines.

Compared with the previous data, the ONS said on Friday that the economic contraction at the height of the Covid crisis in 2020 was not as deep as previously thought.

It found that companies had been adding to piles of unsold stocks rather than running them down, as previously thought.

This caused a £14bn upward revision to the level of real gross domestic product for 2022, meaning that the contraction in measured GDP for 2020 is now estimated to be 10.4 per cent rather than 11 per cent, still the worst annual contraction since the “great frost” of 1709.

For 2021, when the ONS scrutinised wholesale companies and the health sector, it found that they had produced much more in the year than previously thought.

Much of this revision stemmed from higher margins found in the wholesale and retail parts of the UK economy as Covid curbs eased, adding to the real amounts of income and profits that constitute GDP.

The ONS also found that there had been a much larger increase in health services output, both in the public and private sector, in 2021.

The update corrects a previous anomaly, in which huge amounts of extra money was being spent in healthcare over the pandemic but measured output did not rise accordingly.

Articles You May Like

From Sunshine State to Rising Sun, Miami-Dade group set to visit Japan
BlackRock meets with SEC over ETF, Binance’s new era begins and SBF loses release bid: Hodler’s Digest, Nov. 19-25
Barclays explores plan to drop thousands of investment banking clients
Mortgage demand from homebuyers gets a boost as interest rates continue to fall
The looming office space real estate shortage. Yes, shortage