The UK economy bounced back from the Covid-19 pandemic much more quickly than previously thought, official statistics revealed today, with new revised figures adding 1.7% to the country’s GDP for the fourth quarter of 2021.
However, what this means for the current size of the economy and its direction of travel is unclear, as revised statistics covering more recent quarters will not be published until 30 September.
Given that the new estimates of 2021’s GDP are higher, and that unrevised figures show that growth has been close to flat since then, the statistics could mean the economy today is bigger than previously thought, throwing doubt on the narrative of slow UK growth.
However, it could also be that existing estimates of GDP this year is accurate and the economy declined, possibly entering a recession, this year.
The revisions dealt with estimates of business expenditures in 2020 and 2021, during the Covid-19 pandemic.
The ONS said that recent surveys suggest that manufacturing business’ costs in 2020 and 2021 were higher than past estimates. In addition, manufacturing and mining companies also held more stock than first thought.
Both of these led to what the ONS called a “brighter picture” for GDP.
The ONS estimate of GDP for the fourth quarter of 2021 is now 1.7% higher than it was before the revision. That would mean the economy was back ahead of pre-pandemic levels before 2021 was over, a stark difference from the past data which said the UK had still not returned to pre-pandemic GDP in the second quarter of this year.
The new data brings the UK closer to its global peers in terms of its recovery from the pandemic, reaching pre-pandemic levels faster than France and Italy. However, the ONS noted that other countries may revise their own data as well as improved information comes in.
“Producing estimates of GDP in unprecedented times, when much of these data we need to produce complete national accounts are not available for a couple of years after the event is clearly a challenge,” the ONS said. “We are among the first of our international colleagues to update our initial estimates with more detailed data.”
Chancellor Jeremy Hunt hailed the revised figures.
“The fact that the UK recovered from the pandemic much faster than thought shows that once again those determined to talk down the British economy have been proved wrong,” he said.