The UK economy recovered slower in the third quarter of the year despite the easing of coronavirus restrictions over the summer, and before the emergence of the Omicron variant.
According to the Office for National Statistics (ONS), gross domestic product (GDP) growth was revised from 1.3% to 1.1% in Q3, with weaker performances from health and hairdressers, and the energy sector contracting more in September than previously estimated.
However, upward revisions to 2020 means GDP in the three months to the end of September was closer to levels before the pandemic, coming in just 1.5% below the final quarter of 2019.
This was an improvement from the previous forecast of 2.1% below, as annual UK GDP in 2020 is now estimated to have fallen by 9.4%, revised from a first quarterly estimate of a 9.7% slump.
GDP, the measure of the size and health of a country’s economy, is calculated by adding personal consumption, private investment, government spending, and exports together.
In output terms, the largest contributors to the increase in Q3 were hospitality, arts, entertainment, and recreation following the further easing of restrictions and reopening of the economy during this period.
In contrast, production and construction both fell, driven by weak electricity, gas, steam, and air conditioning supply following exceptionally high levels in May 2021. Falls were seen in eight out of 13 manufacturing sub-sectors.
Output in the manufacture of motor vehicles fell for a third consecutive quarter, by 0.5%, although this was a much smaller fall when compared with the first two quarters of the year.
Meanwhile, household consumption rose by an upwardly revised 2.7% during the period, and made the largest contribution to expenditure. But there was a fall in inventories thanks to the recent supply chain crisis, and a negative contribution from net trade.
The UK’s net borrowing position with the rest of the world reduced to -4.3% as a percentage of GDP compared with -2.4% of GDP in Q2, while the household saving ratio decreased to 8.6% in Q3 compared with 10.7% the previous three months.
“With the economy reopening in the third quarter, households saved less in the latest period. However, household saving was still up on pre-pandemic levels.” Darren Morgan, ONS director of economic statistics, said.
“Meanwhile, the UK’s balance of payments with the rest of the world widened as goods exports fell, goods imports grew and foreign companies received more income from their investments in the UK.”
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