ONS revises its findings and says economy actually grew in 2021
The Office for National Statistics (ONS) has released a huge revision to its opinion on the post-pandemic economic performance of the UK, and pronounced the economy as in far better health than was originally reported.
GDP, the size of the country’s economy, climbed back above pre-pandemic levels by the end of 2021, the ONS has said, which is much higher than previously thought.
The ONS originally said the economy was still 1.2% smaller than its pre-lockdown size in the final three months of 2021, but now says GDP was 0.6% higher than before the pandemic.
The ONS said that ‘the unprecedented shock of the coronavirus pandemic’ led to large revisions as ‘the substantial changes in the rate of economic growth are more difficult to measure with the same level of precision as smaller changes during more ‘normal’ times’.
Companies had also continued adding to piles of unsold stock instead of selling them down as had been thought, while wholesalers and the health sector had produced much more in 2021 than ONS data had previously suggested.
Former Tory leader Sir Iain Duncan Smith said: ‘It is time for the ONS and other forecasters to accept that their forecasts are almost always wrong. Instead of using their dire forecasts to beat the UK up, they should talk up the remarkable record of British business in defying the forecasters and succeeding.’
Chancellor Jeremy Hunt said the revisions show that the UK economy ‘had the fastest recovery from the pandemic of any large European economy, thanks to decisions such as furlough that protected millions of jobs.’
‘For that growth to continue, we now need to halve inflation.’ he added.
However, the revision came as separate figures suggested that the manufacturing sector shrank last month at its fastest rate since the pandemic.
The latest statistical release also showed that the average UK house price fell in August at the sharpest annual rate seen in 14 years, £14,600 below their August 2022 peak.
These revisions are helpful, if incredibly late, but the economic outlook is still extremely challenging, inflation remains high and the Chancellor has a tough job ahead when he stands at the Despatch Box to present his Autumn Statement.