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17 May 2021updated 28 Aug 2021 9:36pm

Pubs and cafés are back – but the UK economy will be slow to recover

Britain’s economic recovery has been muted so far, and a cautious return to retail and hospitality could be slowed by the prospect of another wave of infections.

By Nicu Calcea

The reopening of indoor access to pubs, restaurants, performances and sporting events today (17 May) has been keenly anticipated. The latest step in the roadmap out of lockdown follows celebrations last month after outdoor hospitality reopened on 12 April, but early indicators show customers have been more cautious than images of crowded beer gardens might have suggested.

Figures from the restaurant booking platform OpenTable show a spike in activity on 12 April, with reservations and walk-in diners just 20.8 per cent lower than the same day of the same week in 2019 (when indoor dining was also allowed). However the rate has generally remained around 40 per cent below pre-pandemic levels and in London activity has been 60 per cent lower than usual on average.


The slow recovery of UK restaurants has not been helped by the weather, with the country recording the coldest April since 1922. On top of this, many businesses have permanently closed and others lack the space needed for outdoor seating. Of the seven countries tracked by OpenTable, only countries where restaurants are still fully closed or open for takeaway only – Ireland, Germany and Canada – had fewer bookings than Britain.

Activity has been limited in the retail sector too: phone location data from Google shows retail mobility (the number of people visiting shops) increased sharply on 12 April, when non-essential shops reopened, then settled at around 30 per cent below January 2020 levels.

In South Korea, Australia and the US retail mobility has returned almost to normal levels, while India, Turkey, France, Germany and Argentina currently have lower retail mobility levels than the UK.

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However, the data is not all pessimistic. Our recovery tracker shows that the British economy grew by 2.1 per cent in March, a bigger jump than was forecast and the highest growth since August last year. The Bank of England predicts a growth of 7.25 per cent GDP this year, higher than its previous estimate of 5 per cent.

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But the Office for National Statistics has warned that GDP figures are more uncertain than they would have been pre-pandemic. The British economy shrank by 1.5 per cent in the first quarter of 2021, and the economic hangover from Covid-19 will last for years. Analysis by the National Institute of Economic and Social Research (NIESR) shows that GDP for 2025 is now expected to be 4 per cent lower than was forecast before the pandemic. That is equivalent to a loss of £1,350 per person a year.

The number of job advertisements has returned to pre-pandemic levels, though NIESR predicts there will be an additional 295,000 job losses once the furlough scheme ends, with every sector other than construction still shedding jobs into next year. Much of the economic and jobs growth could be limited to London and the south-east, the NIESR report also warns.

For retail, hospitality and other sectors, the hope is that Brits will spend their “accidental savings” – a collective pot of about £180bn – in the UK this summer.

But the reopening of the economy is not without risk. Projections from Imperial College suggest that the reopening could lead to a third wave of infections, and the emergence of new variants could delay the government’s roadmap and limit consumer confidence.