(Bloomberg) — The U.K. economy has recovered from the pandemic faster than previously thought despite a slower recovery in the three months to September.
The Office for National Statistics said gross dometic product is now 1.5% smaller than at the end of 2019, an improvement on its previous estimated shortfall of 2.1%.
The improvement was due to upgrades throughout 2020. GDP grew 1.1% in the third quarter, a downgrade from 1.3%. The ONS’s revisions also showed that Britain weathered the first year of the pandemic better than thought, with the economy shrinking 9.4% rather than 9.7%.
U.K. households continued to save a significant portion of their disposable income in the third quarter as caution reigned despite the ending of lockdown restrictions.
The saving ratio was 8.6% between July and September, the Office for National Statistics said Wednesday. That’s down from 10.7% in the second quarter but well above the 5% average prior to the pandemic.
A lack of opportunities to spend during lockdowns and a limited willingness to splurge when curbs were lifted mean Britons have amassed huge amounts in bank accounts. Economists expect those excess savings to support consumer spending as soaring inflation and looming tax increase erode living standards.
Growth is expected to slow to a crawl in the current quarter amid worsening supply-chain disruptions and a surge in coronavirus cases that is keeping customers away from stores and restaurants. Prime Minister Boris Johnson has refused to rule out tighter restrictions after Christmas, which could see the economy contract in the early months of 2022.
The current account deficit, the gap between money coming into the U.K. and the flows leaving, widened to 24.4 billion pounds ($30 billion) last quarter. That’s the equivalent of 4.2% of GDP. The deterioration was largely due to a sharply wider trade deficit.
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