This month’s edition provides an update on the latest UK economic data, including the third quarter GDP and employment data. We provide an update to our projections and scenarios, reflecting England’s second national lockdown in November and other developments, including the outcome of the US election and progress in a vaccine for COVID-19.
The latest UK economic data
• The pace of the UK’s economic recovery continues to slow down. After two consecutive quarters of negative growth, the UK economy grew by 15% in Q3, from the previous quarter. But this hides a slow down in the monthly rate of growth, from 6.3% in July, 2.2% in August, and 1.1% in September. This means more than 80% of the UK’s recovery occurred in June and July. As of September, economic output stood at 8.2% below pre-COVID levels.
• The labour market remains under pressure, but some tentative positive signs have emerged. In September, a record increase of 181,000 people were made redundant, bringing the unemployment rate for the three months to September up to 4.8%. This represents a 0.7 percentage points increase from the previous quarter. However, there was also a record flow of 215,000 people from economic inactivity to unemployment, which suggests that the gradual relaxation of social distancing measures and the opening of schools has encouraged workers to seek employment.