Virus surge slows Britain's recovery

The economic recovery in the United Kingdom appeared to lose pace last month as COVID-19 infections increased and consumers spent less money in shops, bars and restaurants.

There are conflicting expectations on how the end of the lockdown in Britain, which is planned for July 19, will impact economic activity and business operations.

Consumer spending has been stronger in recent months, but economists said the declining trends may be due to the recent rise in infection rates. Measures of economic activity, such as retail footfall, bank transactions and restaurant bookings, decreased throughout June, reported the Financial Times.

The report said Google mobility data for June showed that visits to retail and recreation centers dropped after a surge in figures following the gradual easing of restrictions since January. Retail consultancy Springboard said retail footfall declined throughout June to 25 percent below June 2019 levels.

Consumer intelligence data from Morning Consult reveals that consumer confidence weakened in the second part of June and government data showed train usage declined.

'Pause for breath'

Gabriella Dickens, a UK economist at Pantheon Macroeconomics, told the Financial Times that "most indicators suggest the recovery has paused for breath".

Economists said the likely July 19 end to COVID-19 restrictions, as announced by Prime Minister Boris Johnson this week, could bring another boost to the economic recovery.

In an interview with the Financial Times, lead UK economist Martin Beck at consultancy Oxford Economics said the policy change "should give the economic rebound new impetus over the summer".

However, there are warnings that the reopening will mean a surge in virus cases that may hinder consumer spending.

Health Secretary Sajid Javid said new cases could rise to 100,000 per day. This would force many people to self-isolate and hamper business operations. Self-isolation rules are due to be lifted on Aug 16.

Any increase in the number of infections "will hold back the economic recovery", Dickens said.

The original reopening date in England had been scheduled for June 21, and the delay has had an impact on economic recovery, said Maddy Alexander-Grout, chief executive at My VIP Card.

"People's confidence was hit once again and that translated very rapidly into reduced footfall on the high street," she told the Financial Times.