Official data revealed that UK economic growth accelerated in August as pubs, restaurants, and festivals benefitted from the first full month without COVID restrictions in England.
Darren Morgan, the current director of economic statistics at the Office for National Statistics (ONS) stated,
"The economy picked up in August as pubs, restaurants, and festivals benefitted from the first full month without COVID-19 restrictions in England,"
The economy is still 0.8% smaller than it was in February 2020, before the pandemic began to take its toll, despite 0.4% growth at the end of the summer.
The economy grew fast at the start of 2021, thanks to the introduction of coronavirus vaccines which eased regulations. During the summer, the spread of the Delta variation expanded and HGV driver shortages heavily disrupted the supply chains across the country.
During the Coronavirus pandemic, the UK economy saw its joint-largest decline in 300 years, falling by 9.7% in 2020. This was only surpassed in 1921 when the economy was still reeling from the effects of WWI.
How has the services sector improved the economy?
Lockdown has had an especially negative impact on the restaurant business. The hospitality and food service business had the greatest reduction in working hours of any industry according to ONS.
During the lockdown, restaurant staff worked 65% fewer hours than in 2019, compared to a 24% drop for all other workers. Despite the removal of lockout limits, restaurant staff worked 52% fewer hours in July than in 2019, compared to 12% fewer hours in all other businesses.
In April 2020, the services sector's economic production was down 90% from February 2020. Although output recovered throughout the summer of 2020 due to the relaxation of coronavirus restrictions and the implementation of the ‘Eat Out to Help Out’ initiative in August, it remained below pre-pandemic levels. As Covid-19 instances increased and limitations were enforced, output dropped again in September.
In order to mitigate further damages to the hospitality, tourism, and entertainment industry, the UK government has provided much support through the implementation of grants, business loans, reduced VAT rates and schemes, thus enabling the hospitality businesses to recover from the significant effects of the Coronavirus pandemic.
Sports clubs, amusement parks, and festivals all contributed to a 9% increase in the entertainment and leisure sectors. There is also a higher demand for hotels and campsites as spending at hotels and campgrounds during the critical month of the school holidays for holiday spots across the country drove the lodging industry to grow by 23% month over month.
Consumer confidence is steadily returning to pre-pandemic levels, according to this research. It illustrates the fact that many people are more confident in their spending decisions at restaurants, bars and other accommodations, therefore helping the economy.
How are other industries and sectors performing now that Covid restrictions have eased?
Although these industries have not provided a large boost to the UK economy, it is worth noting how they are performing now that Covid restrictions have eased in the past year.
Air and rail traffic both increased in August as Covid-related restrictions relaxed, although both industries are still well below pre-pandemic levels.
The pre-pandemic tendency of online purchasing expanded considerably more than the post-pandemic trend.
During the initial wave of the Coronavirus pandemic, the forced closure of stores selling non-essential products greatly boosted internet businesses. According to ONS,
"Online purchases reached greater than typical levels during the course of the pandemic,"
Data also revealed that online sales accounted for 28.5%of total sales in October, up from 20.1% in February.
Since the pandemic began, dispensing pharmacists have regularly sold more than they did previously. Their sales soared in March 2020 as one of the few necessary types of businesses permitted to stay open during the initial shutdown, and they continued to rise in June even after restrictions were lifted and other non-critical establishments were allowed to reopen.
Supermarkets and other non-specialized food outlets traded consistently above pre-pandemic levels as well.
The economy may be recovering at a slow rate and many may perceive this to be good news, but the economy is subject to change over time. We have highlighted certain industries that are performing well despite the Coronavirus pandemic but it is agreeable, that running any type of business during a pandemic can be overwhelming and stressful for many.
We at Persona Finance aim to ease your business needs by offering your business remote accounting services. For more information on our services or for other business queries, please contact us at [enquiries@personafinance.co.uk].
