The UK economy grew by 1.8% in May, it was revealed this week – which is good news as it shows recovery is on the horizon as the country heads towards a new normal. But a new graph has put this into sharp context, showing that in comparison with the huge drop in gross domestic product (GDP) during the pandemic, this slight growth is fairly insignificant.
Information released by think tank the Resolution Foundation, shows 1.8% growth is the largest month-on-month rise in seven years – with a deep v-shaped tick which at first glance appears to show the economy may have bounced back quickly. But when the figures are based on the monthly index going back to 2011, rather than looking at month-on-month growth, there is only a tiny v-shaped uptick showing the recovery is in reality much smaller.
Despite a huge month-on-month growth, the Office for National Statistics (ONS) says the UK economy still remains a quarter below pre-pandemic levels.
slight growth began as coronavirus lockdown restrictions began to be lifted in May and manufacturing and housebuilding showed signs of recovery. Further growth is expected from June as non-essential shops, outdoor markets and car dealerships were reopened.
The 1.8% growth however is weaker than what experts expected, after predicting a month-on-month rise of 5%. The rolling three-month growth rate has continued to fall and as of May, was at an all-time low of -19.1%. It comes as the fiscal watchdog has warned the UK economy might not recover from the pandemic until 2024.
It is imperative that businesses review their models and ensure that they are able to understand potential customer demand. They must be agile and able to put costs at the forefront of decisions.
Prof Bolton of Business Plus is currently working with several organisations to understand what is going on in the ‘real world’ of business and will report the findings in due course.