Welcome to the British Chamber of Commerce monthly update.

Monthly update: 

  • UK GDP growth picked up strongly in April as covid restrictions eased
  • UK inflation rises above target amid the release of pent-up demand and supply chain disruption
  • BCC forecasts record UK GDP growth in 2021, but an uneven recovery

Strong UK GDP growth in April

The latest official monthly estimate for UK economic growth (GDP) revealed that the UK economy grew 2.3% in April 2021, the fastest growth since July 2020 and up from growth of 2.1% in March.

UK GDP grew by 1.5% in the three months to April 2021. The UK economy is in a sweet spot right now with the boost from the release of pent-up demand as restrictions ease and government support expected to drive a substantial revival in economic activity in the second quarter, underpinned by the rapid vaccine rollout.

...reflecting a rebound in services output…

The service sector, which accounts for three-quarters of UK economic output, grew by 3.4% in April 2021, with output from consumer facing services firms increasing by 12.7% as restrictions eased. Within consumer facing services, output from accommodation services rose by 68.6%. Output from pubs, restaurants and cafes grew by 39% as the easing in restrictions allowed them to serve customers outdoors. In contrast, industrial production declined by 1.3% in April, amid ongoing global supply chain disruption.

 …as UK inflation rises above target

CPI inflation stood at 2.1% in May 2021, up from 1.5% in April and means that inflation is now above the Bank of England’s 2% target for the first time since July 2019. May’s inflation increase was largely driven by rising clothing and fuel prices as restrictions eased in the month. Base effects, the release of pent-up demand and supply chain disruption are likely to push inflation markedly higher in the near term. However, the amount of spare capacity in the economy should drag inflation back towards target over the near term.