UK economic growth slows as supply problems hit the recovery

UK economic growth slowed between July and September as supply chain problems hindered the recovery, latest official figures show.

The Office for National Statistics said consumer spending increased as Britain continued to emerge from lockdown.

But that was offset by falls in other areas of the economy, leaving growth for the three months at 1.3%.

It means the economy is 2.1% smaller than in the final three months of 2019, before the coronavirus pandemic hit.

Sterling fell to its lowest level of 2021 against the dollar on Thursday following the news.

Grant Fitzner, ONS chief economist, said service growth expanded, helped by house buyers rushing to do deals before the end of the stamp duty holiday.

"However, these were partially offset by falls in both the manufacture and sale of cars.

"Notably, business investment remained well down on pre-pandemic levels in the three months to September," he said.

Growth slowed significantly from a 5.5% rise recorded between April and June when many Covid restrictions were lifted.

The ONS said that the UK expanded by less than it initially thought in July and August, leading them to revise down growth figures for both months.

"What happened earlier in July and August was that we had the pingdemic." said Sarah Hewin, head of research for Europe and the Americas at Standard Chartered. "And that ended up essentially holding the economy flat."

In contrast, the economy grew by 0.6% during September.

Chancellor Rishi Sunak said the latest figures showed his economic policies were working.

"The economy continues to recover from Covid and thanks to schemes like furlough, the unemployment rate has fallen for eight months in a row and we're forecast to have the fastest growth in the G7 this year," he said.

'Three price increases'

Kirsty Davies-Chinnok, from Professional Polishing Services (PPS), told the BBC that the company, which polishes metals such as stainless steel and aluminium, had been "very busy" throughout 2021 so far.

"We have had some bespoke projects, but we have seen general work has increased," she said.

The managing director said the manufacturing industry "didn't really stop through most of 2020 and it has continued to increase".

It has led to PPS deciding to invest further in its operations despite initially thinking it was "too risky" due to the pandemic, Ms Davies-Chinnok added.

However, rising material and supply costs had led to the firm increasing its prices to customers.

"We have had three price increases this year, which is unheard of," said Ms Davies-Chinnok. "But we can't finance doing business with our customers when our suppliers are increasing their costs to us."