Britain’s economy grew for a third month in a row in July as pubs, restaurants and other sectors reopened after the coronavirus lockdown, but it remained around 12% smaller than its pre-pandemic level.
After crashing by a record 20% in the second quarter, output expanded by 6.6% in July, slower than June’s monthly rate, the Office for National Statistics (ONS) said.
Finance minister Rishi Sunak welcomed the figures but added that people were rightly worried about the coming months.
The economy has recovered about half of its lost output but is still 11.7% smaller than its level in February, before the pandemic hit Britain.
Britain’s economy suffered the sharpest second-quarter fall of any Group of Seven nation in the April-June period.
Hopes for a swift rebound have faded as businesses struggle to cope with social distancing rules and many people remain reluctant to travel on public transport or go to crowded places.
Tensions between London and Brussels over a post-Brexit trade deal are also mounting.
Furthermore, unemployment is expected to rise sharply because Sunak has ruled out extending his coronavirus job retention scheme which is due to expire at the end of October.
Parliament’s Treasury Committee on Friday urged Sunak to “carefully consider” a targeted extension of the scheme and other support measures.
The European Union told Britain on Thursday it should scrap a plan to breach their divorce treaty, but Prime Minister Boris Johnson’s government refused and pressed ahead with a draft law that could sink four years of talks.
Deteriorating relations with the EU make a no-deal Brexit in January more likely, adding to the UK’s economic challenges and to downward pressure on the pound.