UK economy stutters in August despite dining discount

The British economy grew by far less than anticipated during August, raising concerns that the recovery from the coronavirus recession was already stuttering even before the reimposition of an array of lockdown restrictions.

Figures released Friday from the Office for National Statistics show that the economy expanded by only 2.1% in August from the month before. That was way down on the 6.4 per cent expansion in July and substantially lower than the 4.6% anticipated in financial markets.

The hospitality sector was one that performed well, with business boosted by the decision by many to holiday in the U.K. instead of going abroad, as well as the government's dining discount scheme during the month.

Under the Eat Out to Help Out program, sitting customers could receive a 50% discount on food and non-alcoholic drinks at participating restaurants between Monday and Wednesday up to 10 pounds ( 13) per person.

There was strong growth in restaurants and accommodation due to the easing of lockdown rules, the Eat Out to Help Out scheme, and people choosing summer staycations," statistician Jonathan Athow said.

However, he said, many other parts of the service sector recorded muted growth. Manufacturing was one sector struggling with car and aircraft production still below levels seen at the start of the year.

The British economy lost nearly a quarter of its output at the height of the lockdown in spring, when many sectors were closed and those people still working were encouraged to do so from home. Since May, when lockdown measures started to be eased, it has eked out four months of growth, recovering much of the output lost. However, the British economy remained at the end of August 9.2% smaller than its pre-COVID level.

Worries are mounting that the economy will stall in the final months of the year as restrictions have been reimposed following a spike in new coronavirus cases.

Today's figures show our economy has grown for four consecutive months, but I know that many people are worried about the coming winter months," Treasury chief Rishi Sunak said.