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U.K. Economy Shows Signs of Slowing as Covid Hits Supply Chains

  • Survey suggests post-lockdown euphoria is starting to ease
  • Inflationary pressure grows at fastest rate on record
Retail Ahead Of Consumer Confidence And Retail Sales Figures
Photographer: Chris Ratcliffe/Bloomberg
Updated on

Britain’s economy showed signs of slowing in July as euphoria following the easing of coronavirus restrictions eased and a resurgence of the coronavirus caused widespread staff shortages.

An index based on a survey of purchasing managers fell unexpectedly to its lowest since March, when most stores and restaurants were still shut, IHS Markit said on Friday. The findings contrast with official government statistics showing a surge in retail sales last month when consumers splashed out to celebrate European championship soccer games.

The reports add to the complexity of the Bank of England’s assessment on whether to rein in stimulus. While pent-up savings have pushed inflation past the central bank’s target in each of the past two months, concerns are growing about the number of people being told to self-isolate because of the rapidly spreading delta variant of Covid-19.

“July saw the U.K. economy’s recent growth spur stifled by the rising wave of virus infections, which subdued consumer demand, disrupted supply chains and cast a darkening shadow over the outlook,” said Chris Williamson, chief business economist at IHS Markit.