THE UK economy grew 0.4% in February as lockdown restrictions remained – but it was still almost 8% below its pre-pandemic peak.
Gross domestic product (GDP) rebounded slightly from January’s fall of 2.2%, according to revised figures by the Office for National Statistics.
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The UK economy grew 0.4% in February as lockdown restrictions remained – but it was still 7.8% below its pre-pandemic peak
Yet it was still below expectations, and experts at financial services firm Investec had predicted 0.7% growth for the month.
February’s GDP is 7.8% below the levels seen in February last year, compared with 3.1% below the initial recovery peak in October last year.
Throughout February, the government’s coronavirus restrictions affecting economic activity remained broadly unchanged.
The first major stage out of lockdown for businesses came yesterday as non-essential retail, hairdressers and gyms reopened.
What this means for your personal finances
GROSS domestic product (GDP) is one of the main indicators used to measure the performance of a country’s economy.
When GDP goes up, the economy is generally thought to be doing well although today’s figures aren’t strong.
Negative growth often brings with it falling incomes, job cuts and lower consumption.
The Bank of England (BoE) uses GDP as one of the key indicators when it sets the base interest rate.
This decides how much it will charge banks to lend them money, and is a way to try to control inflation and the economy.
So, for example, if prices are rising too fast, the BoE could increase that rate to try to slow the economy down. But it might hold off if GDP growth is slow.
The BoE cut interest rates twice in March due to coronavirus.
Base rate cuts means mortgage borrowers now typically benefit from lower rates, but at the other end of the scale savers earn less on their savings.
To measure GDP, the Office for National Statistics (ONS) collects data from thousands of UK companies.
The hospitality industry including pubs and restaurants can now serve customers outdoors – but indoor dining will be off the cards until May 17.
Meanwhile, nightclubs are set to reopen on June 21 as long as the lockdown easing goes to plan, Boris Johnson announced in February.
The latest GDP figures comes after the economy bounced back more strongly than first thought in last six months of 2020.
Suren Thiru, head of economics at the British Chamber of Commerce, said the latest data “does little to alter the prospect of a downbeat first quarter for the UK economy”.
He added: “The pick-up in output in February reflected a broad-based improvement in activity with all the main sectors recording an increase in growth.
“The clarity provided by February’s announcement of a roadmap for reopening also helped support output in the month.
“However, hope of a sustained consumer-led revival may prove too optimistic as the economic scarring caused by Covid may trigger a renewed reluctance to spend as government support winds down.”
A spokesperson for the ONS said: “The economy showed some improvement in February after large falls seen at the start of the year but remains around 8% below its pre-pandemic level.”
“Wholesalers and retailers both saw sales pick up a little, while manufacturing improved with car producers experiencing a partial recovery from a poor January.
“Construction grew strongly after revised figures showed they had struggled in the last couple of months.”
The latest GDP figures come as UK unemployment hit 1.7million in January with 11,000 more losing jobs.
Around half of UK workers have suffered pay cuts in real terms due to the coronavirus crisis, according to research.
Meanwhile, millions of young workers have received a pay rise of £345 from this month, as the National Living Wage increased.