UK economy bounces back - but hospitality sector does not fare as well

The easing of lockdown restrictions in April helped the UK economy grow at its fastest rate since July 2020 as households returned to high street stores and took advantage of hairdressers reopening, according to new data.

Friday, 11th June 2021, 11:40 am
Updated Friday, 11th June 2021, 11:56 am
Customers are returning to our high streets

The Office for National Statistics said gross domestic product – a measure of economic growth – was up 2.3 per cent in April although it remains below pre-pandemic levels. In July last year the economy grew 7.3 per cent.

It would have been higher if not for a slowdown in the construction sector compared to strong growth in March.

But it was not such good news for the hospitality sector, which in a separate survey saw sales slide below pre-pandemic levels.

Pubs and restaurants have reopened

Non-essential retailers drove much of the growth as they welcomed customers back into stores from April 12 in England, with clothes stores seeing a boost of 69.4 per cent.

Overall growth in the services sector was 3.4 per cent, although it remains 4.1 per cent below pre-pandemic levels of February 2020.

This included restaurants, bars and cafes where customers could dine and drink outdoors again, seeing a 39 per cent rise in growth.

Households also took advantage of the ability to travel across the country again, helping caravan parks and holiday lets to grow 68.6 per cent, whilst hairdressers and other personal services grew 63.5 per cent.

Chancellor Rishi Sunak said: “Today’s figures are a promising sign that our economy is beginning to recover.

“With more than a million people coming off furlough across March and April and the number of employees in work rising, it is clear that our Plan for Jobs is working.

“But I know there are people who still need our support, which is why the furlough scheme is in place until September to protect as many jobs as possible”.

The construction sector fell by two per cent amid a fall in new work – 2.9 per cent – and in repair and maintenance, down 0.6 per cent due to a strong March.

However, the sector has enjoyed a strong pandemic overall and still remains above pre-pandemic levels by 0.3 per cent.

Meanwhile pubs, bars and restaurants across the UK saw sales slide more than a quarter below pre-pandemic levels last month despite the reopening of thousands of venues.

The latest Coffer CGA business tracker revealed that hospitality operators reported a 26 per cent decline for May against the same month in 2019.

Trading was weighed down by restrictions enforcing only outside operations for until May 17, while poor weather also impacted upon customer numbers.

The survey revealed that the reopening of indoor areas from May 17 particularly boosted restaurants, which reported a 13 per cent decline against the same month in 2019.

Pubs saw stronger sales at the end of the month on the back of warm bank holiday weather but still reported a 34 per cent fall against the same month two years earlier.

Meanwhile, bars were the hardest hit part of the sector, as they saw a 38 per cent decline.