Hospitality sector drives 40% of Q2 GDP growth

The UK economy grew by 4.8% in Q2 2021 versus Q1 as some Covid trading restrictions were lifted, leading to a 7.3% rise in consumer spending. Much of this additional spending went on hospitality.

Further analysis as part of the UKHospitality Quarterly Tracker, produced by CGA, shows the significant contribution made by the sector which was responsible for 40% of the UK’s total economic growth from Q1 to Q2 2021.

The Office for National Statistics (ONS) also estimated that GDP had grown 1.0% during the month of June, led by service sector activity. Jonathan Athow, the deputy national statistician for economic statistics at the ONS, said of the June data: “The UK economy has continued to rebound strongly, with hospitality benefiting from the first full month of indoor dining.” 

ONS data for June show that “Food and beverage services” were the main contributor to the growth in consumer-facing services, growing by 10.1% in June 2021.

The ONS added: “Continued strong growth means that the industry is now only 1.5% below its pre-pandemic level (February 2020), and 9.0% above its August 2020 peak when the Eat Out to Help Out Scheme boosted consumer demand for bars and restaurants.”

Commenting on the latest quarterly figures, UKHospitality chief executive Kate Nicholls said: “These figures not only show the importance of the hospitality sector to the UK economy, even in the severely restricted and beleaguered state it was in during the second quarter of this year, but also demonstrate its real potential to power a wider economic recovery now trading restrictions have finally been eased after almost 18 months.

“However, this was not a period characterised by booming sales and plain sailing for the sector, but many weeks where businesses were still operating under strict restrictions and experienced a multitude of challenges brought about by the pandemic. What should be remembered is that the sector collectively lost over £100bn in sales across the course of the pandemic – a truly staggering figure.

“To help safeguard the future of the sector and its recovery, we urge the Government to continue to work closely with businesses to help them navigate the challenges that we will undoubtedly face in the months ahead and to create a business landscape that will help return businesses to profitability as quickly as possible. Measures we are calling for include the urgently needed reform of business rates and a permanently lowered rate of VAT.”

Gross domestic product remained 2.2% below the level reached before the Covid-19 pandemic in February 2020, however, and some analysts said they expected the pace of recovery to have slowed in July as infection rates rose.