According to the Office for National Statistics, the UK economy has recorded its third consecutive month of growth, rising 6.6 per cent in July. This follows growth of 8.7 per cent in June and 2.4 per cent in May.
The FTSE 100, a popular gauge of prosperity for businesses regulated by UK company law, closed up 79.29 points at 6,105 on the 15th September. Pound sterling also continued to make ground on foreign currencies, up +0.18 per cent on the Euro and +0.14 per cent against the Dollar.
The economy’s rebound is largely due to the further easing of lockdown restrictions and the UK’s first major post-Brexit trade deal – an agreement with Japan that will boost trade by an estimated £15 billion.
“Path towards recovery”
Despite economic growth, ONS director of economic statistics Darren Morgan warned that the UK still has a long way to go due to the adverse effects of COVID-19.
“While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.
“Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements. Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time.
“All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover. However, both production and construction remain well below previous levels.”
July 2020 GDP is now 18.6 per cent higher than its April 2020 low. However, it remains 11.7 per cent below the levels seen in February 2020, before the full impact of the coronavirus pandemic.
Economic impact of Japan trade deal
International Trade Secretary Liz Truss hailed Britain’s post-Brexit trade pact with Japan as a “historic moment”. She said it would bring “new wins” for British businesses in manufacturing, food and drink, and tech industries.
“The agreement we have negotiated – in record time and in challenging circumstances – goes far beyond the existing EU deal, as it secures new wins for British businesses in our great manufacturing, food and drink, and tech industries,” Truss said.
The UK-Japan Comprehensive Economic Partnership Agreement also means 99 per cent of exports to Japan will be tariff-free. This is good news for major Japanese investors in the UK such as Nissan and Hitachi.
Critics of the deal pointed out that despite its symbolic importance, it would only boost UK GDP by 0.07 per cent, a fraction of the trade that could be lost with the EU.
“Whilst this agreement is undoubtedly cause for celebration, securing a Free Trade Agreement with the EU remains critical to the future of businesses in the UK,” noted director general of the British Chambers of Commerce, Adam Marshall.
“We urge ministers to redouble their efforts to reach a comprehensive partnership with our largest trading partner at a crucial time in the negotiations.”