According to revised government figures, the UK economy expanded in the second quarter of this year, contrary to an early reading that indicated a contraction.
The Office of National Statistics (ONS) said that economic output increased by 0.2% between April and June, up from an earlier estimate of -0.1%.
It indicates that the United Kingdom is not currently in recession, contrary to what the Bank of England forecast earlier this month.
Nevertheless, the economy remains smaller than it was before the Covid epidemic.
This is because fresh ONS data indicate that the impact of Covid on the economy was greater than previously believed and that the economy shrank by more than anticipated during the first few months of the pandemic.
As a result, the ONS reported that the economy was 0.2% smaller than pre-pandemic levels, although it had previously reported that the GDP was 0.6% larger.
ONS chief economist Grant Fitzner commented on the updated statistics, stating, “These improved figures show the economy increased in the second quarter, revised up from a tiny decline.”
“They also indicate that, despite a decline in family savings in the most recent quarter, households saved more during and after the epidemic than we had previously predicted.”
According to Samuel Tombs, chief UK economist at Pantheon Macroeconomics, “the slump in economic activity throughout 2020 appears even more severe than originally anticipated, and the ensuing rebound will be even weaker.
The UK’s economic size is assessed by its Gross Domestic Product (GDP). This is the value of all business, government, and individual activities in a country.
The Bank of England cautioned earlier this month that the United Kingdom may already be in recession, which is defined as two consecutive three-month periods of GDP contraction.
The Bank expected the economy would contract by 0.1% from July to September, and at the time it was believed the economy had contracted in the preceding quarter.
Mr. Tombs stated that Friday’s new data would force the Office of Budget Responsibility (OBR) to significantly reduce its growth projections.
The OBR is the government’s independent financial watchdog. Typically, it produces economic estimates twice annually to accompany the Autumn Budget and Spring Statement.
The absence of an OBR prediction to accompany the government’s mini-budget last week has been cited as one of the causes of this week’s market volatility.
It volunteered to produce a forecast in time for the mini-budget, but its offer was not accepted.
The International Monetary Fund criticized the government’s plan to slash taxes, and the pound fell to a 37-year low of $1.03 on Monday.
On Friday morning, sterling surged to $1.12, which is close to where it was a week ago before the mini-budget was unveiled.
On Friday, Prime Minister Liz Truss and Chancellor Kwasi Kwarteng will meet with the OBR chairman to examine the aftermath.
