UK economy’s recovery from pandemic stronger than first thought
The UK economy recovered from the pandemic faster than had previously been thought, new revisions from the Office for National Statistics (ONS) show.
In the latest set of Blue Book revisions, the ONS upgraded their estimate for GDP growth in 2022 from 4.3 per cent to 4.8 per cent. This upgrade was a “little larger” than usual, the ONS said.
The upgrade was primarily driven by stronger growth in transport, professional and business support services, the figures showed. This was partially offset by downward revisions in manufacturing and healthcare.
Real GDP per head is now estimated to have grown 0.1 per cent in 2022 rather than stagnating.
The ONS said that the changes showed that “the economy did better than our initial estimates suggested” as well as point to the “sizeable changes” in the way the economy operates post-pandemic.
Growth in 2021 was revised a little lower while the deep slump in 2020 was slightly less severe than first thought.
The ONS also made changes to its weighting of various sectors reflecting the changing structure of the economy since the pandemic.
Mining and quarrying has been given a larger weight because of increases to oil and gas prices. The health sector, which increased in size a lot during the pandemic, also remains larger than its long-term average.
On the other hand, manufacturing and accommodation and food are both below their pre-pandemic levels.
Revisions to GDP take time to come through reflecting the time it takes to collect and process more comprehensive surveys. In September the ONS will be extending the revisions to update 2023 and 2024 GDP estimates.
Andrew Goodwin, senior economic adviser to the EY Item Club, said the bigger picture after the revision was “little changed”.
“If you use the level of GDP at the end of 2022 compared with the 2019 average to benchmark performance, the UK is still in the middle of the G7 league table according to the new data, a substantial way behind the US,” Goodwin said.
GDP revisions have been larger than usual due to the impact of the pandemic. Last year the ONS published another set of major revisions, which showed that the UK’s performance was roughly in line with peers, where previous estimates suggested it was lagging behind.
Following the revisions, which received some criticism from Conservative politicians, the ONS asked the statistics regulator to review “best practice” for publishing data revisions.
“Recent revisions have reflected the widespread challenges of estimation during the pandemic period and recovery,” the ONS said.
So far this year the UK has outperformed many advanced economies, growing 0.7 per cent in the first quarter of the year.