LONDON — Britain’s economy grew more slowly than previously thought in the July-September period, before the Omicron variant of the coronavirus posed a further threat to the recovery later in the year, official data showed on Wednesday.
Gross domestic product in the world’s fifth-biggest economy increased by 1.1% in the third quarter, weaker than a preliminary estimate of growth of 1.3% as global supply chain problems weighed on manufacturers and building firms.
That was slower than the economy’s 5.4% bounce-back in the second quarter when many coronavirus restrictions were lifted, the Office for National Statistics said.
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Investors are braced for a further slowdown in the fourth quarter of 2021 and a weak start to 2022 due to a rise in COVI9-cases caused by Omicron which has hurt Britain’s hospitality and leisure sector and hit retailers.
Prime Minister Boris Johnson has ruled out new COVID restrictions in England before Christmas but said he might have to act afterwards. Scotland and Wales have tightened controls.
“Although the economy has got better at coping with restrictions with each new wave, the possibility of tighter restrictions in January is further darkening the outlook for GDP,” Bethany Beckett, an economist with consultancy Capital Economics, said.
The ONS said households dipped into their lockdown savings to finance their spending. The savings ratio fell to 8.6% of disposable income, down from almost 11% in the second quarter.
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Weakness in the health sector, where test and trace work and vaccinations tailed off, and among hairdressers were partly behind the cut to the third-quarter growth estimate.
A fall in energy output, after a surge in demand during a cold spring in the second quarter, also weighed.
“However, stronger data for 2020 means the economy was closer to pre-pandemic levels in the third quarter,” ONS Director of Economic Statistics Darren Morgan said.
The slump in Britain’s economy last year was now estimated at 9.4%, revised from a 9.7% crash, and the ONS believed GDP in September was 1.5% below where it was at the end of 2019, revised up from the previous estimate of 2.1%.
However, Britain’s progress towards regaining its pre-pandemic economic size, in inflation-adjusted terms, remained behind that of most other big rich economies such as France, Germany and the United States, the ONS said.
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Business investment fell by 2.5% in the third quarter from the previous three months and was nearly 12% below its pre-pandemic level.
The Bank of England is hoping for a revival of business investment to help improve Britain’s longer-term growth prospects.
Britain’s balance of payments deficit widened to 24.4 billion pounds ($32.35 billion) as goods exports fell, goods imports grew and foreign companies received more income from their investments in the United Kingdom.
Economists polled by Reuters had expected a smaller deficit of 15.6 billion pounds.
As a share of GDP, the shortfall almost doubled to 4.2% from 2.3% in the second quarter. ($1 = 0.7542 pounds) (Writing by William Schomberg, editing by Andy Bruce, Kirsten Donovan)
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
