Covid scars had deeper impact on UK retail than expected

The negative impact of the Covid-19 on the retail industry may have been underestimated, according to new official data.

Findings from the UK’s Office for National Statistics (ONS) released on Monday indicate a shrunken economy and ongoing suffering in post-pandemic daily life for many individuals.

The ONS said the revised estimates of GDP still show that there was more of an adverse impact on “high-contact” industries in the first half of 2020 and there has been a weaker recovery thereafter, where these “high-contact” industries are now 10 percent below Q4 2019 levels.

The restrictions also led to changes in the level and composition of household spending, which was most evident in the lower levels of spending on “social consumption”, which refers to spending on eating out, leisure travel and cultural activities. The response to the coronavirus pandemic was that households had been unable and/or unwilling to spend on these types of social activities.

The UK lags behind other G7 nations

The ONS have also published data that indicates the UK as the only G7 country where economic output is yet to return to 2019 and pre-pandemic levels.

"The UK's level of trade openness - the size of its trade flows relative to GDP - has fallen further than that of other G7 countries in recent years, coinciding with EU Exit and the coronavirus (COVID-19) pandemic, following which the UK has experienced a later rebound in trade openness than other G7 countries," the ONS said in its publications of recent trends in the international trade flows of G7 economies.

"The EU Exit process has been accompanied by more volatility in UK goods trade than has been experienced by other G7 economies, where survey evidence points to there being heightened uncertainty and some border frictions."

On 17 November new prime minister Rishi Sunak will release the government's autumn statement, with increased taxes expected to cover the 50 billion pound deficit in public spending left by the coronavirus crisis.

Articles sources: Office for National Statistics (ONS), released 31 October 2022, ONS website, article, Blue Book 2022 – revised impacts of the coronavirus (COVID-19) pandemic on the UK economy; Financial Times