UK GDP increases 2.3% in April

The UK GDP is estimated to have grown by 2.3% in April, new figures published by the Office for National Statistics (ONS) have revealed.

This was the fastest monthly growth since July 2020 as lockdown restrictions that had impacted economic activity continued to ease.

According to the data, the service sector grew by 3.4% during April, with consumer-facing services reopening in line with the easing of restrictions.

April’s GDP still remains 3.7% below the pre-pandemic levels seen in February 2020, but the ONS noted it is now 1.2% above its initial recovery peak in October last year.

AJ Bell finance analyst, Danni Hewson, said that the UK economy is “hurtling down the road to recovery” slightly faster than expected.
 
“It’s also higher than the peak experienced in October last year demonstrating the resilience of business and the desire of consumers to embrace their newly re-found freedoms,” Hewson commented.

“But the feeling is the recovery is lumpy and delays in lifting restrictions could make it even more bumpy. The service sector is still far below it’s pre-pandemic levels and many in the hospitality sector are concerned about making it through the summer if social distancing continues to constrain sales.

“The next few months will bring challenges as programmes like furlough begin to unravel and there have already been calls for the chancellor to consider extending the scheme into the autumn for sectors unable to get back to fighting strength.”

Conister director, Douglas Grant, added: “We must remember that the UK’s SME debt burden is ballooning, and we are in serious danger of seeing a relentless flow of weak zombie-like companies falling off a loan default cliff

“It is imperative that we avoid compounding this cycle by focusing solely on supporting sectors and businesses that are strong and nimble enough to adapt to the new economy and therefore continue contributing to its growth.
 
"We believe the introduction of the Recovery Loan Scheme (RLS) will certainly help. We are pleased to see the government look beyond the initial triage phase and instead identify, prioritise and protect our most resilient business sectors that can meaningfully contribute to the new economy.”

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