Personal Finance. Money. Investing.

The Office for National Statistics (ONS) said that gross domestic product (GDP) increased by just 0.1% in July, a significant slowdown from the 1% growth seen the month before.

Many companies have faced problems with the pingdemic and shortages of materials. The construction sector has been hit especially hard with output dropping 1.6% in July. Retailers also saw declines and lawyers were affected by the tapering-off of the stamp duty holiday.

ONS deputy national statistician for economic statistics Jonathan Athow said: “After many months during which the economy grew strongly, making up much of the lost ground from the pandemic, there was little growth overall in July. Oil and gas provided the strongest boost, having partially bounced back after summer maintenance. Car production also continued to recover from recent component shortages.”

Mr Athow added: “The service sector saw no growth overall with growth in IT, financial services and outdoor events – which could operate more fully in July – offsetting large falls in retail and law firms.”

The arts, entertainment and recreation sector, however, saw a 9% increase following the lifting of social distancing measures on July 19

Economists had predicted a slowdown in GDP growth in July. However, this was an average forecast at 0.5%, according to Pantheon Macroeconomics. 

The Office for National Statistics (ONS) reported that, between June and July, the number of UK workers on payrolls increased by 182,000. However, at 28.9 million, this figure still comes in 201,000 lower than pre-pandemic levels, with around 750,000 jobs lost during the first wave of the coronavirus pandemic. 

The ONS also confirmed that unemployment rates dropped to 4.7% for the three-month period to the end of June where analysts had expected rates to remain flat at 4.8% for the quarter. 

Additionally, the ONS reported a further increase in job vacancies across the UK as companies seek to fill roles following the reopening of the economy. Job vacancies across the country have now risen by more than 290,000 against the previous quarter.  

John Athow, deputy national statistician for economic statistics at ONS, said the statistics body saw no sign of redundancies starting to pick up in its survey data ahead of the furlough scheme starting to wind down. Athow also said that the Insolvency Service figures for July suggested the same. 

The ONS said gross domestic product (GDP) contracted by 1.6% in the first quarter of the financial year. A decline of 1.5% has been previously estimated. This puts GDP at 8.8% below its pre-pandemic levels at the beginning of the year where initial estimates had been 8.7%. However, the contraction is still substantially lower than the 20% drop which was seen during the UK’s first lockdown in spring 2020.

Monthly figures also demonstrate an impressive recovery. In February and March, GDP bounced back despite the UK’s third lockdown still being in place at the time. In April, GDP jumped 2.3% higher. The Bank of England’s outgoing chief economist Andy Haldane commented that the economy was going “gangbusters”.

The most recent data from ONS shows that UK households dramatically cut their spending in the first quarter, putting cash into savings instead. The household saving ratio increased to 19.9% where, in the previous three months, this figure was at 16.1%. The figure is the second highest on record after the 25.9% seen in the second quarter of 2020.

The UK economy shrank by a record 9.9% last year but narrowly avoided a much-feared double-dip recession. The shrinking economy is thought to be largely due to coronavirus restrictions according to figures from the Office for National Statistics (ONS).

The latest report shows that the UK’s economic contraction was more than twice as much as the previous largest annual fall on record.

There was some good news even though the overall annual report looked bleak as the economy recovered to grow by 1.2% in December, after shrinking by 2.3% in November.

This is thought to be due to the relaxation of lockdowns during the run-up to Christmas, but many industries which had started to recover lost ground were hit again and suffered further losses such as automotive, hospitality, the beauty sector such as hairdressers.

The slight growth in December confirmed economists’ hope, that the UK economy looks set to avoid what could have been its first double-dip recession in over 40 years. However, with the lockdown currently in full force, there is some trepidation as to what the figures for January and February bring.

What is a Double-Dip Recession?

A recession is defined as a period of two consecutive months where a country’s economy shrinks. A double-dip recession is when the economy recovers for a short period of time into growth only to fall back into shrinkage once more.

Speaking about the news, Chancellor Rishi Sunak said: "Today's figures show that the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world.

"While there are some positive signs of the economy's resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses.

"That's why my focus remains fixed on doing everything we can to protect jobs, businesses and livelihoods."

Britain has suffered a torrid time during the coronavirus pandemic, as it reported Europe's highest death toll and also sits near the top of the world's highest death tolls per capita. This has led to long periods of lockdowns and continuous restrictions, which it seems have had a record-breaking negative impact on what was a thriving economy a year ago.

The blow suffered by the large service sector, on which the UK is very dependant, much of which has been closed for the best part of the last year has been cited by many as one of the largest contributing factors to the damage suffered by the UK economy.

However, there is hope with Britain boasting the highest vaccination rate of most European countries so far, raising the prospect of a faster overall rebound for its economy, although experts are cautioning that this may not occur until later this year.

Retail sales volumes in the UK saw a historically tepid rise over the Christmas period despite the easing of November lockdown restrictions on 2 December.

New data published on Friday by the Office for National Statistics (ONS) showed that retail sales rose by just 0.3% in December from the previous month, far below economists’ expected gains of 1.2%. Overall, retail sales fell 0.4% in Q4 from the previous quarter.

The figures show that UK retail sales experienced their largest annual fall in history last year, slumping 1.9% overall. Clothing stores were hit the hardest, with a 25.1% sales drop, followed by sales at petrol stations, “other stores” and department stores, which fell 22.2%, 11.6% and 5.2% respectively.

“During December, there was initially a period of eased restrictions early in the month, however, there followed a number of tighter restrictions to non-essential retail in England, Scotland and Wales later in the month,” the ONS noted in its release as a factor that affected retail turnover.

“Despite the monthly recovery, sales in the sector are still 14.2% lower than December 2019 and continue to remain at a lower level than before the pandemic struck.”

Despite the grim outlook for retailers, the ONS also noted that online sales grew by 46.1% during 2020 – the sharpest annual growth the sector has seen since 2008.


The pound was trading 0.5% lower against the dollar at $1.366 and 0.4% lower against the euro at €1.124 on Friday morning as the ONS’s figures were released. This shift comes on the back of dashed hopes for an early exit from lockdown, as ministers’ comments indicated that nationwide lockdown measures could last beyond spring.

Prime Minister Boris Johnson said it was “too early to say” when restrictions would be eased, refusing to rule out measures continuing into the summer.

The number of people being made redundant in the UK reached a record high in October amid the second coronavirus wave, new data has revealed.

The Office for National Statistics (ONS) said on Tuesday that redundancies rose to 370,000 in the three months leading up to October as jobs were cut in the run-up to the withdrawal of the government’s furlough support scheme which had been slated to close at the end of the month. The wage subsidy scheme was then extended until the end of March 2021 as rapid acceleration in COVID-19 infections prompted a second national lockdown in England and tighter controls elsewhere in the UK.

ONS data revealed employment has fallen at its fastest pace in a decade. There are now 819,000 fewer people on UK company payrolls than there were in February when the pandemic first hit, the employment having risen to 4.9% in October.

Meanwhile, the number of people claiming unemployment- and low pay-related benefits reached 2.7 million, an increase of 64,300.

Worst affected by the rise in redundancies were young men aged between 18 and 24, with unemployment levels in this bracket having risen by 39% since February. The worst-affected sectors were hospitality and retail, which have respectively shed around 297,000 and 160,000 jobs this year.

Business chiefs have warned that the rise in unemployment in the UK is likely to accelerate further as London and other parts of the UK prepare to enter Tier 3 of England’s regional lockdown system, which will see pubs, restaurants, cinemas, museums and other venues shut down from Wednesday. This will mark the third time these venues have been forced to close since the onset of the pandemic earlier this year.


“While the roll-out of the vaccine has buoyed employers, it won’t automatically undo the damage done to their businesses by the pandemic,” warned Tej Parikh, chief economist at the Institute of Directors, who suggested that cutting employer national insurance contributions could help their cashflow troubles and keep the furlough scheme’s new March wind-down date from becoming another financial cliff-edge.

The UK economy grew by a record 15.5% from July to September, according to new figures released by the Office for National Statistics (ONS) on Thursday, ending a six-month recession induced by the first wave of the COVID-19 pandemic and subsequent lockdown measures.

The figures match the ONS’s initial estimate of GDP growth in Q3, though they fall short of economists’ predicted growth of 15.8%. Nevertheless, the July-September growth of 15.5% represents the largest quarterly jump in GDP the ONS has posted since records began in 1955.

UK GDP contracted by a fifth in Q2, the most extreme slump on record – and analysts have warned that the economy is likely to shrink again in the run-up to 2021 as renewed lockdown measures have been imposed across England, set to continue until 2 December.

In its release, the ONS noted that the Q3 recovery was driven in large party by household spending, while business investment remained “much weaker”. Though the recovery since July has been encouraging for investors, the UK economy as a whole remains 10% below 2019 levels.

September-specific data from the ONS revealed that the economy grew by 1.1% during the month, indicating that the pace of the UK’s economic recovery has slowed significantly.


“Today’s figures show that our economy was recovering over the Summer, but started to slow going into Autumn,” said Chancellor Rishi Sunak in a statement. “The steps we’ve had to take since to halt the spread of the virus mean growth has likely slowed further since then.”

Samuel Tombs, Pantheon Macroeconomics’ chief UK economist, predicted that GDP would shrink by around 0.5% during Q4, with little chance of recovering to September levels until spring of 2021.

New data released by the Office for National Statistics (ONS) showed that HM Treasury borrowed £35.9 billion in August – the highest for any August month and the third-highest monthly amount since records began in 1993. The figure represents a £30.5 billion increase from August 2019, owing to the UK government’s efforts to fund its economic relief measures while also tackling the continued spread of COVID-19.

Borrowing between April and August reached £173.7 billion, £145.9 billion higher than the same period in 2019 – another record.

However, the figures fell below expected levels; Pantheon Macroeconomics’ aggregated average of analysts’ predictions forecasted £38 billion worth of borrowing in August.

The new figures were released a day after Chancellor Rishi Sunak announced a raft of measures to bolster the UK economy during the winter months. The most significant addition was the Jobs Support Scheme (JSS) that will replace the currently existing furlough support scheme when it expires at the end of October.

The JSS will support employees in “viable” jobs by topping up the salaries of those who have returned to work but have had their hours reduced. Additional measures  in the plan include new grants for self-employed workers until 30 April 2021 and an extension of the government’s emergency business loan schemes.


Separate figures released by the ONS on Thursday estimated that around 12% of the UK’s workforce remained on partial leave or full furlough earlier in September.

The UK government’s total debt stood at £2 trillion during August, exceeding the size of the country’s entire economic output. With the new borrowing taken into account, this debt has now reached £2.024 trillion.

August’s Consumer Prices Index (CPI), released on Wednesday, showed that the UK’s Eat Out to Help Out scheme had a direct impact on inflation, which fell to 0.2% last month.

Consumer prices rose by 0.2% in August, the smallest increase in annual terms since December 2015. In July, inflation rose by 1%.

The Office for National Statistics (ONS) attributed the low inflation rate in part to restaurant and café prices falling 2.6% in August – their first fall since records began in 1989 – as a consequence of the Eat Out to Help Out scheme.

The scheme, implemented to draw customers back to restaurants and pubs as lockdown measures eased over summer, offered 50% discounts on food orders up to £10 in value. More than 100 million discounted meals were ordered through the scheme.

The ONS also credited other factors for the decrease in inflation, including a significant fall in the price of clothing and footwear. Air fares also fell in price as the COVID-19 pandemic continued to drive demand for international travel lower.

In a statement, ONS deputy national statistician Jonathan Athow emphasised the impact of the government’s dining incentive scheme on August’s CPI. "The cost of dining out fell significantly in August thanks to the Eat Out to Help Out scheme and VAT cut, leading to one of the largest falls in the annual inflation rate in recent years,” he said.


"For the first time since records began, air fares fell in August as fewer people travelled abroad on holiday,” Athow continued. “Meanwhile, the usual clothing price rises seen at this time of year, as autumn ranges hit the shops, also failed to materialise."

New data from the Office for National Statistics (ONS) has revealed that UK government debt passed £2 trillion for the first time, reaching £2.004 trillion in July -- £227.6 billion more than last year’s figure.

The unprecedented rise in government borrowing in 2020, with the months of April to July each posting the highest levels of borrowing since records began in 1993, can be credited to spending on anti-COVID-19 measures like the Coronavirus Job Retention Scheme. ONS remarked that this is the first time that government debt has risen above 100% of GDP since the 1960-61.

Ruth Gregory, senior UK economist at Capital Economics, noted that July’s borrowing figure of £150.5 billion “is close to the deficit for the whole of 2009-10 of £158.3bn, which was previously the largest cash deficit in history, reflecting the extraordinary fiscal support the government has put in place to see the economy through the crisis."

Coinciding with the new release on government debt, further data showed that activity in the UK’s private sector grew at its sharpest rate since 2013 during August. The Composite Purchasing Managers’ Index (PMI) read at 60.3 on Friday, beating analysts’ expectations and easily surpassing July’s figure of 57, indicating accelerated growth across the sector.


“The combined expansion of UK private sector output was the fastest for almost seven years, following sharp improvements in business and consumer spending from the lows seen in April,” commented Tim Moore, economics director at HIS Markit.

Meanwhile, separate figures from the ONS also revealed that the UK retail sector rebounded faster than expected between June and July, with a 2% increase in sales volume where analysts had predicted only 0.2%.

The quantity and value of total reported also saw an increase of 4.4% from February, beating pre-lockdown figures.

Steve Watmore, Payroll and HR Product Manager at Sage, outlines how firms will need to prepare for the end of the government's support scheme.

The Job Retention Scheme, introduced in April, has been a lifeline for many employers and employees facing the harsh reality of lockdown halting business and operations; total figures from HMRC on claims for the furlough scheme top out at an incredible £31.7 billion as of 26 July.

However, the scheme is not an endless pot; its expiration date has been set for 31 October, and this month marks the beginning of increased costs for employers who now must cover National Insurance and pension contributions. In addition, there will be tapering on the government wage contributions for the scheme from September onwards. In this step-by-step guide we will take a look at what your business can do to effectively respond to the upcoming changes to the scheme that has helped businesses across sectors survive and revive through these difficult times.

1. Find out more about the latest changes and how they affect you

The latest HMRC release details the changes for August through to October that will affect businesses across the UK.

Employers need to plan for cost increases of around £300 per employee from 1 August onwards, since the government will no longer cover national insurance and minimum auto-enrolment pension scheme contributions. In September and October, the employer will have to increase their contributions as the government gradually removes support.

Hypothetically, with cumulative costs shown in brackets, an employer with a furloughed employee on maximum contributions of £2,500 will need to first start paying the employee National Insurance costs in August (c. £300), then account for 10% reduction on government wage contributions in September (c. £600), as well as a further 10% reduction in October (c. £900). The employer will then need to take a view after the scheme dissipates to see whether keeping employees on the payroll is sustainable.

Employers need to plan for cost increases of around £300 per employee from 1 August onwards, since the government will no longer cover national insurance and minimum auto-enrolment pension scheme contributions.

With these changes in mind, we advise that your first step should be to reassess financial and internal communication plans, using government insight as a springboard. Direction can first be taken from HMRC which will help delineate the differences between August, September and October payroll.

2. Involve your employees in plans for recovery

The ONS create a weekly report pulling out stats on Coronavirus and its social impacts. Data from 22 to 26 July shows that 54% of working adults reported they have travelled to work in the previous week. So, as businesses look to open their doors returning to some sort of “normal”, and welcome employees back to the office, this is a chance for employees to play a role in reimagining the business going forward.

In order to get employees to participate in recovery, leaders can initiate new business drives or restrategising sessions and shepherd departmental involvement. Sage has researched into the advisory value that different skills and roles can offer – the fourth annual ‘Practice of Now’ report published in 2020 found that 79% of survey respondents are confident about providing business management and advisory services like cash flow management. In addition, 75% are confident about providing industry-specific advice for clients, such as standard profit margins. 73% are confident about providing technology implementation recommendations like AI and automation. While this demonstrates accountancy can add value to services provided to clients, it also shows that it’s important to use some of that keen insight for internal processes.

Employees who have close knowledge of cash flow can help restructure businesses in the coming months and years; encouraging the involvement of employees to advisory roles outside their normal work will help businesses mould themselves to fit the changed contours of the business landscape.

3. Prepare for future uncertainty by investing in technology

Accounting software from a good partner or software supplier helps avoid costly and damaging errors. Awareness of the HMRC guides and rules will be key, coupled with salient use of technology to find the right figures from your payroll and help initiate processes like payment in lieu.

Accounting software from a good partner or software supplier helps avoid costly and damaging errors.

In order to make the right calculations and adjust payments and payroll accordingly, technology can help provide precise accounting. Payroll software can automatically adjust to the changing reclaim values, compensating for the government removing NIC contributions in August, then the reduction of the September government contribution to wages to 70% of normal gross, then finally with October government wage contributions going down to 60%.

Our third piece of advice would be to invest in the right technology for your organisation; it can help improve the efficiency and productivity – especially important in today’s society. Great tech can help to reduce errors within your business and understand your data more to enable you to respond and react better to demands.

Preparation is key and with these growing costs, businesses need to also assess whether they’ll be generating revenue to accommodate shortfall or have enough work for the employees. Payroll and accounting technology can help provide data and estimations on when companies will be back in the black.

4. Organise the HR side of the change

The key to a successful transition involves mastering the behind the scenes of payroll, knowing the letter of the law and ensuring there is a clear channel of communication between employees, managers, and the accounting department.

Employees need to be aware of the JRS claim periods, alterations to employment contracts, where they stand if they are a freelancer following the end of the scheme, how things like holiday pay is calculated and how the tapering of the scheme will affect them.

For many businesses, fixed costs have not gone away. Rent, rates utilities will all have been accrued costs through this time. For some, supply chain issues or increased costs after full lockdown can also have significant impact on operating margins. It is likely that new contingency plans around maintaining the workforce need to be considered, which unfortunately does include redundancy.


Employees will need clear communication and guidance during this time in order to help them understand how their payroll and payslips may change, and what steps they may need to take. With the weighty impact of the furlough scheme, companies need to be more cognisant of changes to shift patterns, salaries and probation periods; business leaders need to keep a tight control on finances and internal communication now more than ever.

Last, but not certainly least, supporting your employees through these tough and uncertain times is critical. Offer guidance and care to those that have been affected negatively – establishing wellbeing and support systems that will help deal with difficult transition that are to come as the furlough scheme ends.

Looking ahead

The government introduced the Job Retention Scheme to help mitigate the negative effects of lockdown and let businesses freeze operations to play a waiting game.

Now businesses need to get back into gear and plan for the future. The four key steps we recommend taking to ensure your business remains efficient, effective and prepared for the next phase of the furlough scheme are:

New figures from the Office for National Statistics (ONS) have shown that UK GDP fell by more than 20% between April and June. Following on from a drop of 2.2% between January and March, this means that the UK has now officially entered a recession.

The 20.1% drop in quarterly GDP exceeded that of all other G7 nations; France’s GDP fell by 13.8%, followed by Italy at 12.4%, Canada at 12%, Germany at 10.1%, the US at 9.5% and Japan at 7.6%. It is also the steepest recorded contraction since the ONS began collecting data in 1955.

In an interview with Sky News on Wednesday morning, Chancellor Rishi Sunak attributed the contraction to the “composition” of the service-based UK economy, which was heavily affected by the COVID-19 pandemic and resultant lockdown measures.

Social activities, for example going out for a meal, going to the cinema, shopping, those kinds of things comprise a much larger share of our economy than they do for most of our European comparative countries,” he said.

So in a situation where you have literally shut down all those industries for almost three months, a long period of time, it is unfortunately going to have an outsized impact on our economy.”


Commercial data and analytics firm Dun & Bradstreet have updated their predictions for the UK economy in 2020 following the new figures’ release. Their updated forecasts now predict a 9.8% drop in real GDP for the year.

Dun & Bradstreet’s latest proprietary data for Q2 shows that payment performance has deteriorated across all 14 sectors tracked during the pandemic, despite several quarters of continuous improvement prior to lockdown,” wrote the firm’s chief analyst, Markus Kuger. “During the coming quarters, it will be more important than ever for businesses to assess potential credit risk across their existing and future business relationships.”

The basic definition for a recession is a decline in GDP over two consecutive quarters. The UK has not experienced a recession since the 2008-2009 financial crisis, which saw a peak quarterly dip of 2.2% in GDP – just over a tenth of the plunge recorded for Q2 2020.

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram