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UK economic growth picked up in August as bars, restaurants and festivals benefited from a first full month without COVID restrictions in England, official figures show.

Gross domestic product (GDP) increased by 0.4% month-on-month, according to the Office for National Statistics (ONS) – slightly below experts’ average forecast of 0.5% growth.

However the report also pointed to a setback for the previous month, with July GDP, initially estimated to have shown a small 0.1% increase, now believed to have seen a 0.1% decline.

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Restaurants and hotels boosted growth

That was after revisions to data from sectors including car manufacturing – an industry which has been badly hit by the global shortage of semiconductor chips.

Overall it meant that GDP in August was 0.8% below the pre-pandemic levels of February 2020, the ONS said.

Darren Morgan, ONS director of economic statistics, said: “The economy picked up in August as bars, restaurants and festivals benefited from the first full month without COVID-19 restrictions in England.

“This was offset by falls in health activity with fewer people visiting GPs and less testing and tracing.

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“However, later and slightly weaker data from a number of industries now mean we estimate the economy fell a little overall in July.”

Chancellor Rishi Sunak responded by pointing to recent data showing growth in payroll jobs numbers and forecasts that UK growth will outpace other G7 countries.

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The bounce-back has been partly attributed to staycations this summer

The ONS figures showed a mixed picture for different parts of the economy in August.

Within the services sector – which makes up four-fifths of output – it was hotels and restaurants together with arts, entertainment and recreation that led the way though retailers saw a decline.

There was also a pick-up for crude oil and natural gas after a recent closure of oil field production sites for planned maintenance. But the construction sector shrank.

Kitty Ussher, chief economist at the Institute of Directors, said: “August was a strong month for the UK economy, with the easing of restrictions and staycation boom causing a welcome growth in the service sector when compared with the previous month.

“Retail sales, however, were more muted but this could have been due to a higher proportion of disposable income being spent instead on going out over the summer.

“While the construction sector appears to have been affected by supply shortages, elsewhere in the economy there are signs that previous bottlenecks are able to self-correct to a certain extent.”

Paul Dales, chief UK economist at Capital Economics, said that for the third quarter from July-September, growth may have fallen short of the Bank of England’s forecast – suggesting this could dampen prospects for an interest rate hike.

Britain’s economy shrank by 9.7% last year as the coronavirus pandemic crushed economic activity – its biggest annual decline in 99 years.

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Post Office campaigner Sir Alan Bates says he is yet to receive reply to letter to PM

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Post Office campaigner Sir Alan Bates says he is yet to receive reply to letter to PM

Post Office campaigner Sir Alan Bates is yet to receive a reply from Sir Keir Starmer, despite writing to him over a month ago.

Sir Alan said he had written to the prime minister to remind him the “clock is still ticking” on a financial redress deadline for victims.

In his letter, he demanded a March 2025 deadline for compensation for sub-postmaster victims of the Horizon scandal.

Sir Alan confirmed to Sky News he was yet to hear back from the prime minister.

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“It was over a month ago,” he said.

“I sent him a reminder yesterday. I told him the clock is still ticking and it’s now five months from the March deadline, which I’m told is still achievable by other professionals.

“So let’s get on with it, that’s all we want. Get on with it.”

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Vodafone and Three merger could get green light, says UK’s competition watchdog

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Vodafone and Three merger could get green light, says UK's competition watchdog

A £15bn merger between two of the UK’s biggest mobile networks could get the green light – if they stick to their commitments to invest in the country’s infrastructure, the competition watchdog has said.

The Competition and Markets Authority (CMA) said the merger of Vodafone and Three had “the potential to be pro-competitive for the UK mobile sector”.

Announced last year, the proposed £15bn merger would bring 27 million customers together under a single provider.

The watchdog previously warned that tens of millions of mobile phone users could end up paying more if the merger went ahead.

However, the two groups recently set out plans to protect consumer pricing and boost network investment.

The CMA has now laid out a list of “remedies” required for the deal to go-ahead.

They include the networks committing to freezing certain tariffs and data plans for at least three years to protect customers from short-term price rises in the early years of the network plan.

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From September: ‘A transformation for the UK’

Stuart McIntosh, chair of the inquiry group leading the investigation, said on Tuesday: “We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed.

“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger.

“A legally binding network commitment would boost competition in the longer term and the additional measures would protect consumers and wholesale customers while the network upgrades are being rolled out.”

Today’s announcement is provisional, with a final decision due before 7 December. The inquiry group is inviting feedback on today’s announcement by 5pm on 12 November.

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Bosses rail at business secretary over ‘avalanche of costs’

The CMA also published a list of potential solutions – which it called remedies – to issues it identified with the merger.

If the networks want the merger to go ahead, the watchdog requires Vodafone and Three to:

• Deliver a joint network plan to set out network upgrades and improvements over eight years;

• Commit to keeping certain existing tariff costs and data plans for at least three years to protect customers from price hikes;

• Commit to pre-agreed prices and contract terms so Mobile Virtual Network Operators (MVNOs) – mobile providers that do not own the networks they operate on – can obtain competitive wholesale deals.

Vodafone and Three are two of the biggest mobile firms in the UK, and their networks support a number of MVNOs including Asda Mobile, Lebara, Voxi, and Smarty.

Responding to the watchdog’s announcement, a spokesperson for Vodafone on behalf of the merger said: “The merger will be a catalyst for positive change.

“It will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country.

“The merger is also closely aligned with the government’s mission to drive growth and to encourage more private investment in the UK.”

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Earlier this year, Three’s chief executive hit out at the UK’s “abysmal” 5G speeds and availability as he urged regulators to approve the company’s merger with Vodafone.

Robert Finnegan noted his firm’s “cash flows have been negative since 2020 and our costs have almost doubled in five years, meaning investment in [the] network is unsustainable”.

“UK mobile networks rank an abysmal 22nd out of 25 in Europe on 5G speeds and availability, with the dysfunctional structure of the market denying us the ability to invest sustainably to fix this situation,” he added.

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Bosses rail at business secretary over ‘avalanche of costs’

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Bosses rail at business secretary over 'avalanche of costs'

Business leaders expressed frustration with ministers on Monday amid a growing budget backlash that bosses said would trigger an “avalanche of costs” and leave them with no choice but to slash investment and increase prices.

Sky News has learnt that bosses of large retail and hospitality companies and trade associations told Jonathan Reynolds, the business secretary, that last week’s budget risked damaging consumer confidence and exacerbating challenges facing the UK economy.

Among the dozens of companies represented on the call are said to have been Burger King UK, Fuller Smith & Turner, Greene King, Kingfisher and the supermarket chain Morrisons.

Mr Reynolds is said to have acknowledged that Rachel Reeves‘s inaugural fiscal statement had “asked a lot” of British business, with James Murray, the financial secretary to the Treasury, understood to have described it as “a once-in-a-generation budget”, according to several people briefed on the call.

Business and Trade Secretary Jonathan Reynolds arrives in Downing Street.
Pic: PA
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Jonathan Reynolds. Pic: PA

One insider said that Nick Mackenzie, the chief executive of Greene King, had highlighted that the increase in employers’ national insurance (NI) contributions would cause “a £20m shock” to the company, while Fullers is understood to have warned that it would be forced to halve annual investment from £60m to £30m as a result of increased cost pressures.

Rami Baitieh, the Morrisons chief executive, told Mr Reynolds that the budget had exacerbated “an avalanche of costs” for businesses next year, and asked what the government could do to mitigate them.

Sources added that the CBI, the employers’ group, said its impact would be “severe”, while the British Beer & Pub Association added that there was now a disincentive to invest and flagged “a tsunami” of higher costs.

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How will the budget affect businesses?

The range of comments on the call with ministers underlines the scale of discontent in the private sector about Labour’s first budget for nearly 15 years.

Only a small number of interventions during the discussion are said to have been in support of measures announced last week, with the Federation of Small Businesses understood to have praised the doubling of the employment allowance, which would see many of the smallest employers having their NI bills cut by £2,000.

The Department for Business and Trade has been contacted for comment, while none of the companies contacted by Sky News would comment.

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