COVID-19: UK economy revival is breathtaking but the rollercoaster has further to run

It might have been in line with expectations.

It might be a somewhat meaningless number, coming as it does after such a sharp fall.

It might be short-lived.

Even so, there is still something breathtaking about the latest quarter’s gross domestic product figure.

Not since the statistic was invented in the 1930s have we seen anything like this: a quarterly expansion in economic output of 15.5%.

In fact, pretty much the only moment in the past century that comes close was the aftermath of the general strike of 1926, when the economy collapsed and then bounced back sharply in the following months.

And that is not a bad comparison, for in a sense what we have gone through in the past year is more like a general strike than a typical recession.

Vast swathes of the economy were forcibly shut down in the face of COVID-19 and then reopened.

What we have learnt about this morning was the speed of that re-opening.

There are two reasons for concern.

The first is that the economy remains smaller than it was before the onset of the virus.

Back in the 1920s, after the general strike ended the UK’s economic output quickly recovered to a higher level than before the strike.

This time around, the economy is still 8.2% smaller.

To some extent, this is to be expected; after all the virus is still at large; normal behaviour has yet to reassert itself.

Even so, the 1.1% growth in September was weaker than most economists had anticipated, underlining that the rebound is not living up to expectations.

And that brings us to the second cause for concern: we are back in a lockdown again – in England at least.

That implies that following this sharp increase, the economy will take another downwards dive in the coming months.

In other words, we are in the middle of a W-shaped downturn.

That there is more pain to come is not a surprise.

The chancellor has already reinstated the furlough scheme, in anticipation of a difficult winter.

But it means today’s numbers represent something of a mirage.

Still, the news is not all bad.

The arrival of at least one effective vaccine for COVID-19 has already triggered optimism on stock markets.

Many now envisage a return to normalcy next year.

Indeed, some economists believe that come late 2021, gross domestic product will finally return to its pre-crisis levels.

The concern is what happens between now and then.

Many households face lean times, many workers face losing their jobs, and all the while the government’s debts are mounting.

The economic rollercoaster has further to travel before it comes to a halt.

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