The UK economy grew 6.6% in July as lockdowns eased, but has recovered only about half of lost output

• UK GDP grew by 6.6% in July in its third monthly rise, in line with forecasts, but economic output remains well below pre-pandemic levels, data released on Friday showed.
• "The UK economy is still 11.7% smaller than it was in February before the full impact of the coronavirus pandemic hit," the Office of National Statistics said.
• All sectors were up on the month, with improvements in production and construction, but levels still remain bleak in comparison to previous output.
• "The prospect of a second wave is restraining consumer and business confidence, and firms continue to face cash flow difficulties," CBI's chief economist said.
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Britain's economy grew for a third straight month in July, expanding by 6.6% as lockdown restrictions eased, but has yet to recover even half of the output lost to the coronavirus pandemic, the national statistics agency, said on Friday.

The expansion, which was in line with expectations for a rise of 6.7%, followed June's 8.7% increase and May's 2.4% rise. The economy contracted at a record 20.4% pace in April, when the pandemic was at its worst, with over 1,000 deaths a day at one point.

Manufacturing and construction showed improvements, while the services sector, which makes up around three quarters of total economic activity, continued to struggle.

The UK economy has only recovered around half of the output lost since the start of the COVID-19 pandemic and in July, was 12% below where it was in February, the Office for National Statistics said.

"While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic," Darren Morgan, director of economic statistics at the ONS, said.

"Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements," he said.

"Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time."

GDP shrank 7.6% in the three months to July. City of London economists have predicted that third-quarter GDP would rise by 15%, reversing 55% of the prior quarter's drop in the three months to June.

"This shouldn't be a surprise - it will be enormously difficult to claw back the rest of the lost output quickly while social distancing remains in place, as this will continue to act as a handbrake on any recovery," CMC chief markets strategist Michael Hewson said on Twitter earlier.

Britain has suffered the highest death tolls from the coronavirus outbreak in Europe, with over 41,000 dead.

As the country has re-opened for business and children have returned to school this fall, there has been a renewed increase in the number of cases of Covid-19, which could put the brakes on further recovery.

"The prospect of a second wave is restraining consumer and business confidence, and firms continue to face cash flow difficulties," said Rain Newton-Smith, the chief economist at the Confederation of British Industry, a business lobby group.

Millions of jobs were supported by the government's coronavirus furlough scheme, but chancellor Rishi Sunak insists the support will end on October 31.

"A successor to the job retention scheme and a deal with the EU are essential foundations for a near-term economic recovery. Learning the lessons from local lockdowns will also help manage any second wave of COVID, and get growth onto a more sustainable footing," Newton-Smith said.

According to a survey this week of British businesses, 36% of the workforce were working remotely and 11% were still furloughed, the ONS said.

The UK officially entered recession after GDP plunged 20.4% in the second quarter — its biggest fall on record — and marking the second consecutive quarter of retraction.

Economic output began to contract sharply in late March, when government-imposed sweeping lockdown measures were put in place to combat the spread of the virus.

The US economy too has been in recession since February, as well as the neighbouring eurozone, which is Britain's largest export market.