33. Weekly Newsletter

UK Q2 Forecast

The first quarterly estimate for UK GDP growth in Q2 has been released and suggests a rise of 4.8% following the easing of COVID restrictions. Interestingly, the largest contributors to growth were the wholesale/retail trade, accommodation and food service activities, and education.  Each month in Q2 is expected to have achieved moderate growth and real GDP growth will likely be the strongest in the G7– followed by Italy and then Spain. However, it is also worth noting that these countries were also the worst hit by the pandemic. Overall, only the USA has recovered to above pre-pandemic levels (0.8%) among the G7.

At present, the UK economy is 4.4% below pre-pandemic levels (Q4 2019) and yet media coverage has been highlighting what has been described as the worst labour shortages since 1997. The Financial Times has reported that the number of permanent job vacancies has increased to 43%; furthermore, Bank of England data suggests unemployment rates may have already peaked in May (4.8%) and that wages, with inflation, could climb.

COVID Update

Almost 6.2m people in the UK have tested positive for COVID but the daily rise in cases is currently in decline following a fourth wave which peaked in mid-July. A total of over 130,000 deaths have been attributed to the virus and are disproportionality led by the unvaccinated. Nationally, 47.3m people (87.6% of adults) have received their first vaccine and approximately 41m of these patients have also received their second dose. This brings the total number of inoculations carried out, by the private sector and National Health Service, to around 88 million.

COVID restrictions are being widely removed across the UK and, from this week, anyone fully vaccinated (or aged under 18) will no longer have to self-isolate after coming into contact with someone infected with the virus. Although, travel restrictions still remain in place and regional differences still apply; for instance, people within Wales are still required to wear face coverings whilst moving about indoors.

Withdrawal from Afghanistan

On Monday, Taliban fighters took control of Kabul after almost 20 years of the US and UK supporting a new national government. Over this period, the UK had sent over 100,000 troops into the country and had worked to help train the Afghan military- although, this unexpectedly quick defeat has drawn criticism from within the UK Government.

Currently, there are around 4,000 British citizens in Afghanistan and additional troops have been deployed to help with a swift evacuation. Approximately 900 British troops are working to patrol Kabul’s airport as safety threats continue to rise. Another diplomatic issue raised now also includes the evacuation of the British ambassadorto Kabul, Sir Laurie Bristow,  who currently remains in the besieged capital as he processes visa applications.