Chancellor Rishi Sunak has said he was confident Britain’s economy will continue to recover from the virtual standstill caused by the pandemic. “Our recovery is well under way thanks to the success of the vaccination rollout and the roadmap, with more employees on payrolls than at any point since last March,” he said.
But are recent events making things look less positive? At Continuum we are looking to see what is really going on.
Official figures look worrying…
Britain’s economic recovery from the lockdown almost stalled in July despite the removal of most pandemic restrictions.
The Office for National Statistics said gross domestic product (GDP) grew by just 0.1% in July from a month earlier. GDP was lower than the 0.6% growth forecast by City economists, and a sharp slowdown compared with June when the economy grew by 1%. The service sector recorded no growth overall on the month. Rising costs and shortages of raw materials triggered a fall in construction, while manufacturing remained flat as firms struggled to fill staff vacancies.
One high spot was a strong growth of 118% in air transport in July as the easing of travel restrictions allowed more consumers to take foreign holidays. However, the sharp rise was from a low base, and the sector remains 77% below pre-Covid levels.
On the other side of the Atlantic, official figures which show a slowdown in employment recovery paint a similar picture.
… and shortages may be back
But probably more worrying than the official figures there may be signs of trouble in everyday life. There are as yet no real food shortages, but the food retail industry seems to be worried about the possibility – and we have all seen the queues to the petrol pumps.
But it is these queues that provide the clearest indication of the problem. Any slowdown in the recovery may be due to factors that are not purely economic.
The cause for the stall in economic growth in late summer may be the ‘pingdemic’ where an overly strict approach to isolation was keeping healthy people away from work and causing businesses to shut their doors again, albeit temporarily.
More recently, empty shelves and dry filling stations seem to be the result of a shortage of HGV drivers. Fuel and goods are ready to be delivered, but without drivers, they remain locked in depots.
But there is real good news.
The latest figures suggest that after a shaky first three months of the year, the economy grew by a record 5.5% in the second quarter as restrictions on activity were eased. GDP grew faster than forecast in the second quarter as fewer Covid restrictions prompted households and companies to spend more.
Higher NHS spending, stronger investment and a bounce back in exports is helping the UK economy to recover more quickly from the lockdown at the start of the year, official figures have shown.
Even if current disruption to supply chains is serious, the government seem to be aware of the problem, and are looking at ways to bring in more drivers – be they from the EU on a temporary visa, or from the military.
What about your own recovery?
There are sure to be setbacks in the recovery from the largest economic setback in a generation. The slowdown and the shortages are hopefully just bumps in a long road.
But whatever the direction the UK economy is taking, your own economic recovery is probably more of a concern for you.
At Continuum we believe that there may be some clear priorities for you:
Growing wealth. Current low interest rates may be around for years and cash savings may remain unrewarding. Investing, on the other hand, may offer the potential of higher returns as recovery takes hold. If you are not an investor, it could be time to start and if you are, it may be time to ensure your portfolio reflects the changes to the world of business brought about by Covid.
Your pension. You should probably review your pension, to ensure that it is still on track to provide the retirement income you need. Your pension pot may have taken a hit with the stock market roller coaster over recent months. A full pension review could be a very good idea.
Your home. Working from home may have become part of your post-Covid lifestyle. You may be thinking about a larger home further away from the easy commuter routes – and making a move now could still let you take advantage of record low mortgage rates.
You can see more about our services in our downloadable brochure, but the important thing to remember is that our service is independent and personal.
We always sit down with clients, to understand their life goals, before we prepare a lifetime financial plan. This can cover every aspect of your financial future and based on the most suitable financial products selected from the entire market to help you reach your goals. But sometimes those plans need to be re-written. Whatever life holds, and whatever shape recovery takes, we are there to help you.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
Equity investments do not afford the same capital security as deposit/cash accounts, when investing your capital is at risk