England was free of Covid restrictions in August.
Commenting on the latest GDP figures, Victoria Scholar, Head of Investment, interactive investor, says: “August was the first full month without Covid restrictions in England. The UK’s monthly GDP figure fell slightly short of analysts’ expectations, growing 0.4% month-on-month, while July’s figure was revised lower from +0.1% to -0.1%. Domestic holidays helped drive the 23% month-on-month growth for hotels and campsites, along with the resurgence in arts and entertainment. July’s pingdemic when millions were self-isolating also flattered the month-on-month growth figure.
“However, construction declined by 0.2% month-on-month, shrinking for the fourth month in a row on the back of shortages of raw materials and workers. All sectors of the economy are still smaller than before the pandemic, with consumer-facing services around 5% below their peak. Pressure remains on the UK economic outlook with the cost-of-living crisis, above-target inflation and rising Covid cases.
“This week the IMF downgraded its outlook for full-year UK GDP, forecasting growth of 6.8%, below the Bank of England’s own projection for 7.25%. Yet market expectations are rising for a rate hike in December from the Bank of England to temper rising price levels. October has seen a turnaround for the pound after a four-month stretch of declines with today’s data modestly supportive for GBP, which has broken back above $1.36 and has gained almost 1.5% month-to-date.”
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