According to data released by the Office for National Statistics (ONS), UK GDP rise 2.1% in March – showing signs of a recovery from the devastation caused by the COVID-19 pandemic.
The ONS data revealed that the figure was 1.3% higher than many economists had predicted, following the news that GDP had contracted by 1.5% in the first three months of 2021 – primarily driven by the third national lockdown.
However, despite the announcement of GDP growing 2.1% in March, the economy remains 5.9% below its pre-pandemic peak.
The service sector grew by 1.9% in March 2021, with schools re-opening across England and Wales and retail trade sales continuing to show strength.
Output in the production sector grew by 1.8% in March 2021, as manufacturing grew for a second consecutive month, at 2.1%.
The construction sector grew by 5.8% in March 2021, driven by growth in both new work and repair and maintenance. The growth in construction (and indeed manufacturing) reflect businesses continuing to adapt, including development of COVID-19 secure environments to operate in.
Darren Morgan, Director of Economics, ONS, said: “The strong recovery seen in March, led by retail and the return of schools, was not enough to prevent the UK economy contracting over the first quarter as a whole, with the lockdown affecting much of the services sector.
“However, construction grew strongly over the quarter and, in March, was above its pre-pandemic level. Manufacturing also recovered from an initial fall increasing strongly in February and March, as businesses continued to adapt and made themselves COVID-19 secure.”
Ian Warwick, Managing Partner at Deepbridge Capital, said: “Today’s monthly GDP estimate reveals the fastest monthly growth since August 2020 and is further evidence that the economy is moving in the right direction at a significant pace. As we focus on economic recovery, it remains critically important that scale-up businesses, particularly in high-growth sectors such as digital technologies and life sciences are supported; as they will be at the very heart of economic growth as we create an economy fit for the twenty-first century.
“Government initiatives such as the Enterprise Investment Scheme (EIS) have never been more important for helping entrepreneurs and innovators source the funding they require, whilst also offering private investors with tax incentives to develop UK-supporting private equity portfolios. With our EIS funds reaching record levels of funding in 2020/21 it is evident that there is considerable demand from investors and financial advisers alike to invest in early-stage UK companies which we believe will be at the forefront of our economic recovery.”
Alpesh Paleja, CBI Lead Economist, said: “While latest data confirms the economy was hit once again by a renewed lockdown at the turn of the year, the fall in activity was much smaller compared with Spring 2020. Households and businesses have clearly adapted better to working and living under Covid restrictions, despite the brutal cost of doing so.
“A range of indicators, including CBI business surveys, point to a rebound in activity heading into summer – with the economy opening up and pent-up demand waiting to be unleashed. But this is a recovery that will be felt more by some. Undoubtedly, hardest-hit sectors and households have a longer road ahead.
“To inject momentum into the recovery, the government can provide clarity on outstanding issues around re-opening, including social distancing, access to workplace testing and use of Covid-status certification. The time has also come for real global leadership, starting with using today’s B7 recommendations to drive a sustainable recovery from the pandemic and provide the tangible action needed on other big issues including the climate emergency, promoting free trade, and unleashing the potential of digitalisation.”