LONDON (Reuters) – Britain’s economy grew much more slowly than expected in August, setting back its recovery from the coronavirus lockdown, with much of what growth there was down to a one-off government restaurant subsidy programme, official data showed on Friday.
Gross domestic product rose by 2.1% from July, its slowest month-on-month increase since the economy began its recovery in May after a record slump, and not even half the median forecast of 4.6% in a Reuters poll of economists.
“While the latest data confirms a rebound in economic activity continued into August, the sharp slowdown in growth indicates that the recovery may be running out of steam, with output still well below pre-crisis levels,” Suren Thiru, head of economics at the British Chambers of Commerce said.
“The increase in activity in August largely reflects a temporary boost from the economy reopening and government stimulus, including the Eat Out to Help Out Scheme, rather than proof of a sustained ‘V’-shaped recovery.”
More than half of the economic growth in August came from the accommodation and food sector, where output surged by 71.4%, boosted by the Eat Out to Help Out scheme to subsidise meals and easing lockdown restrictions, the ONS said.
Sterling weakened against the U.S. dollar and the euro after the data was released.
The economy – which shrank by more than any other Group of Seven nation in the April-June period – remained 9.2% smaller than its level just before the pandemic hit Britain, the Office for National Statistics said.
“The economy continued to recover in August but by less than in recent months,” said ONS deputy national statistician for economic statistics Jonathan Athow.
The dominant services sector grew by 2.4% from July, a lot slower than expectations for growth of 5.0%.
Growth in the smaller manufacturing and construction sectors also fell short of forecasts.
Economists have warned that the British economy may struggle to grow in the months ahead as the number of COVID-19 cases began to rise in September and the government responded by tightening its restrictions on people gathering together.
Bank of England Governor Andrew Bailey said on Thursday that risks to Britain’s economy were “very much on the downside” and the central bank was ready to use its policy firepower to limit the impact of a second wave of COVID cases.
The BoE is widely expected to increase its bond-buying programme in November in its next move to pump more stimulus into the economy.
Britain is also facing the risk that it fails to secure a trade deal with the European Union with negotiations still ongoing ahead of the Dec. 31 expiry of the country’s post-Brexit transition period.
(Reporting by William Schomberg and Andy Bruce; editing by Kate Holton)
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.
