# UK economy still below pre-pandemic size, underscoring challenge for Truss Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-30 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: UK economy remains below pre-pandemic levels: Challenges for Meta Description: Data shows Britain's economy remains below pre-pandemic levels, posing a challenge for new Prime Minister Liz Truss. Despite some growth, overall outlook URL: https://financedigest.com/uk-economy-still-below-pre-pandemic-size-underscoring-challenge-for-trusshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-30t114749z1lynxmpei8t0k4rtroptp4britain-economy-1736815116873-compressed.jpg) By Andy Bruce and William Schomberg LONDON (Reuters) – Britain’s economy remained below its pre-pandemic peak, according to data published on Friday that left the country further adrift of other Group of Seven nations and underscored the challenge facing new Prime Minister Liz Truss. The Office for National Statistics said economic output unexpectedly rose by 0.2% in April through June, revised up from a previous reading of a 0.1% contraction, meaning the British economy has not yet fallen into a recession. But the ONS revised down its estimate for Britain’s recovery from the COVID-19 pandemic, reflecting a bigger [hit to the economy](https://www.financedigest.com/uk-economy-set-for-smaller-hit-in-2023-than-previously-feared-imf.html "UK economy set for smaller hit in 2023 than previously feared – IMF") than first thought in 2020 when health lockdowns shut down businesses across the country. It said gross domestic [product in the second quarter](https://www.financedigest.com/impact-com-continues-momentum-in-the-first-quarter-fueled-by-client-growth-new-products-and-partnership-events.html "impact.com Continues Momentum in the First Quarter, Fueled by Client Growth, New Products and Partnership Events") remained 0.2% below where it was at the end of 2019, a cut to its previous estimate of 0.6%. Despite the better news on the performance of the economy in Q2, the overall picture is that the economy is in worse shape than we previously [thought,” Paul](https://www.financedigest.com/young-leaders-forum-paul-forkans-leadership-thoughts.html "Young Leaders Forum: Paul Forkan’s leadership thoughts") Dales, an economist at Capital Economics, said. And that’s before the full drag from the [surge in inflation and leap in borrowing costs](https://www.financedigest.com/suedzucker-quarterly-profits-surge-73-5-despite-cost-rise.html "Suedzucker quarterly profits surge 73.5% despite cost rise") have been felt. GRAPHIC-UK suffers weakest [recovery in G7 from COVID-19](https://www.financedigest.com/covid-19-recovery-tips-for-2021.html "COVID-19 Recovery tips for 2021") pandemic (https://fingfx.thomsonreuters.com/gfx/polling/znpneykkevl/Pasted%20image%201664522305650.png) ![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/09/210-663x500.jpg) Separate data showed British house prices failed to rise in monthly terms for the first [time since](https://www.financedigest.com/soccer-arsenal-reach-womens-champions-league-semis-for-first-time-since-2013.html "Soccer-Arsenal reach Women’s Champions League semis for first time since 2013") July 2021, a latest sign of the slowdown in the market caused by the cost-of-living squeeze and rising interest rates. New British finance minister Kwasi Kwarteng last week published an [economic plan](https://www.financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strains.html "UAE plans long-term economic ties with Israel despite political strains") that he said would spur growth by cutting taxes. But investors responded by selling the [pound and British](https://www.financedigest.com/shell-to-evaluate-25-billion-pound-british-investments-after-windfall-tax.html "Shell to ‘evaluate’ 25 billion pound British investments after windfall tax") government bonds. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the figures [suggested that the damage inflicted to the economy’s](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") ability to grow by COVID-19 and Brexit was even larger than previously thought. These revisions will compel the Office for Budget Responsibility to [revise down further its estimates for future potential GDP,”](https://www.financedigest.com/spain-q2-quarterly-gdp-growth-revised-to-1-5-from-1-1.html "Spain Q2 quarterly GDP growth revised to 1.5% from 1.1%") he said. The recent turmoil in British financial markets has put the [country’s large current account](https://www.financedigest.com/5-countries-you-need-to-have-an-offshore-account-in.html "5 Countries You Need To Have An Offshore Account In") deficit into new focus. Friday’s [data showed current account gap in the April-June period shrank to 33.8 billion pounds](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise") ($37.60 billion). Economists polled by Reuters had pointed to a deficit of roughly 44 [billion pounds](https://www.financedigest.com/edf-delays-uk-nuclear-project-to-2027-ups-price-by-3-billion-pounds.html "EDF delays UK nuclear project to 2027, ups price by 3 billion pounds"). ($1 = 0.8990 pounds) The shortfall was smaller than a 43.9 [billion deficit in the first quarter which was revised down from an earlier estimate in part due to energy](https://www.financedigest.com/petrofac-hitachi-energy-receive-14-billion-agreement-from-tennet.html "Petrofac, Hitachi Energy receive billion agreement from TenneT") companies, buoyed by surging prices, making more profit abroad than initially thought. The January-March [deficit remained the biggest](https://www.financedigest.com/platinum-facing-biggest-deficit-in-years-as-carmakers-snap-up-metal.html "Platinum facing biggest deficit in years as carmakers snap up metal") on record, the ONS said. Truss and Kwarteng were [due to meet the head of Britain’s independent fiscal watchdog on Friday as the government](https://www.financedigest.com/uniper-ceo-to-resign-due-to-government-takeover.html "Uniper CEO to resign due to government takeover") looks to reassure investors. (Reporting by Andy Bruce; Editing by Willam Schomberg and Frank Jack Daniel) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---