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August 2021

As restrictions have eased across the UK, and support measures start to wind down, many economic indicators are showing the UK performing well at the end of August. But staff shortages due to Covid-19 and supply chain issues continue to affect the services and manufacturing industries.

Headline Indicators summary

GDP grew by 4.8% in April-June 2021 compared to the previous three-month period (January-March). This compares to growth of 2.0% in the Eurozone in Q2 2021.

Services output was up by 21.0% in the three months to June 2021 compared to the previous year. Manufacturing output rose by 26.3%.

CPI inflation was 2.0% in July 2021, down from 2.5% in June. Inflation in the Eurozone was 2.2% in July, up from 1.9% in June.

The Bank of England’s Monetary Policy Committee (MPC) left interest rates unchanged at 0.1% on 5 August, the lowest they have ever been, following a cut from 0.25% on 19 March 2020.

Average wages excluding bonuses were 7.4% higher in the three months to June 2021 compared with the year before. CPI inflation for this period was 2.0%.

32.28 million people were in employment in April-June 2021, down 329,000 from a year before. The employment rate was 75.1%, down from 75.7% the previous year.

1.60 million people were unemployed in April-June 2021, an increase of 193,000 from the year before. The unemployment rate was 4.7%. The UK harmonised unemployment rate for Q1 2021 was 4.9%, above the rate of Germany (3.9%) but below that of the US (6.2%) and France (8.0%).

Productivity across the whole UK economy fell by 0.5% in the flash estimate for Q2 2021 compared with the previous quarter. Compared with the previous year, it was up by 3.1%.

Government borrowing in April-July 2021 was £78 billion, £62 billion less than the equivalent period in 2020/21. At the end of July 2021, public sector net debt was equivalent to 98.8% of GDP, compared with 83.4% before the pandemic in February 2020.

The UK had a trade deficit of £4.4 billion in the three months to June 2021, compared with a £1.8 billion deficit in the previous three months. The current account deficit was £12.8 billion in Q1 2021 (2.4% of GDP), down from £26.3 billion in Q4 2020 (4.8% of GDP).

The value of sterling fell by 0.2% between June and July, following an increase of 0.1% between May and June. Compared with a year ago, it is 6.4% higher.

The volume of retail sales increased by 5.2% in the three months to July 2021 compared with the previous three months, and increased by 11.1% compared with the previous year.

GfK’s Consumer Confidence Index, which measures consumer attitudes, was at -8 in August 2021, down from -7 in July.

House prices increased by 13.2% in the year to June 2021.

Household debt stood at 130.2% of disposable income in Q1 2021. It has been around this level since mid-2017.

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