UK economic growth slows to six-month low in October

Britain’s GDP growth slowed to 0.4% in October from 1.1% in September as new restrictions on surging Covid-19 cases hurt hospitality sector which registered drop of 14%.

The weakest growth since April’s collapse on the first lockdown shows the economy lost momentum, with rising concerns that partial lockdowns across the England in November would contribute possible contraction in the fourth quarter.

The latest figures show that the output was almost 8% lower from pre-pandemic levels in February and 8.2% weaker than in October 2019.

The growth slowdown warns that the economy faces few difficult months, as Britain has the biggest death toll from coronavirus in the Europe and restrictions are likely to remain for some time.

Analysts do not expect the economy to regain pre-pandemic levels until the end of 2022, despite recovery picked up rapidly after collapsing on Covid-19 first lockdown, as acceleration in new virus cases slowed growth, with expectations for further decline in November and fall of 3% in the fourth quarter.

Another important factor that may strongly hurt British economy is Brexit, as UK and EU are still far from reaching a trade deal, risking significant losses if Britain leaves the Union on Jan 1 without a trade agreement.

Economists expect further slowdown and the Bank of England to cut interest rates to zero if Brexit trade talks collapsed.