UK economic recovery slows sharply

Britain’s economic recovery slowed sharply in July, official data showed Friday, as rises in Covid cases and supply shortages offset further lifting of lockdown restrictions.

Gross domestic product output stood at 0.1 percent in the month compared with GDP of 1.0 percent in June, the Office for National Statistics (ONS) said.

It was nevertheless the sixth month of growth in a row.

“The measly... rise in GDP in July shows that amid rising Covid-19 cases and broadening product/labour shortages, the economic recovery has stalled,” noted Paul Dales, chief UK economist at research group Capital Economics. 

“More timely evidence suggests August may not have been much better.” 

The world is seeing a resurgence in coronavirus cases owing to the fast-spreading Delta variant.

This in turn is severely disrupting the global supply chain, while Britain’s recent divorce from the European Union has exacerbated the problem in the UK.

Shops are not receiving deliveries, including of staples such as milk, as post-Brexit rules make it harder to hire EU citizens, leaving haulage

companies with a drastic shortage of lorry drivers.

Separate official data Friday showed that EU imports of goods into Britain dropped in July.

Further trouble lies ahead with the British government’s furlough scheme that has supported millions of private-sector jobs during the pandemic close to ending, a move that risks a spike in unemployment.

Economists do not expect sectors seriously affected by a shortage of staff owing to the virus outbreak and Brexit -- including also hospitality -- necessarily to benefit from the bigger pool of available workers once furlough ends on September 30.    

The UK has more than one million job vacancies despite the furlough scheme supporting jobs at a cost of almost £70 billion ($97 billion, 82 billion euros).