Economic Perspectives –

The recovery continues, though growth moderates

The latest Perspective from Ruth Lea CBE, Economic Adviser to Arbuthnot Banking Group.


31st August 2021


Ruth Lea CBE


In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest UK data:

  • Markit’s flash UK Composite Output Index slipped to 55.3 in August, after July’s 59.2, with the slowdown partly attributed to staff and supply shortages.
  • Both services and manufacturing growth slowed in August.
  • The SMMT said that car production fell 37.6% (YOY) in July 2021, the worst July performance since 1956.
  • The HMRC reported that completed residential transactions fell to 82,110 in July 2021, 61.5% (MOM) lower than in June (213,370), non-seasonally adjusted data. The Stamp Duty Land Tax (SDLT) nil rate threshold (for England and Northern Ireland) was reduced from £500,000 to £250,000 on 1 July, causing transactions to peak in June.
  • The ONS reported that the proportion of businesses’ workforce on full or partial furlough was 7% (around 1.8mn) in early August, the joint lowest since the scheme began.
  • The ONS added that 39% of those on furlough leave in early August were reported to be fully furloughed, the lowest proportion since data began to be collected (October 2020).

International update:

  • Markit’s Composite Output Index for the Eurozone slipped marginally in August to 59.5, after July’s 60.2. German growth continued to outstrip French growth.
  • The US Composite Output Index eased to 55.4 in August, after July’s 59.9, with capacity pressures, material shortages and the spread of the Delta variant hampering activity.
  • Fed Chair Jerome Powell, in his annual speech at the Jackson Hole Economic Policy Symposium on 27 August, confirmed the Fed could start reducing the pace of asset purchases this year, but it was in no rush to raise interest rates.

Ruth Lea said “Much has been made of the UK growth slowdown indicated by the Markit indices for August. But it should be emphasised that GDP growth in 2021Q2 was above trend and, even with moderation in 2021Q3, the recovery continues. This is not to dismiss the special problems, including staff and supply shortages, faced by businesses at the moment. Not at all. These problems are only to be expected as the economy, and more generally the global economy, continues to open up after the tough Covid-related restrictions.”





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Author -

Ruth Lea CBE

Ruth Lea CBE

Economic Adviser, Arbuthnot Banking Group

Ruth Lea CBE has been Arbuthnot Banking Group’s Economic Adviser since 2007 and was an Independent Non-Executive Director from 2005-2016.

Ruth co-founded Global Vision in 2007 and was Director until 2010, and was previously the Director of the Centre for Policy Studies (from 2004 to 2007), Head of the Policy Unit at the Institute of Directors (from 1995 to 2003) and Economics Editor at ITN (from 1994 to 1995).  Prior to ITN she was Chief UK Economist at Lehman Brothers, Chief Economist at Mitsubishi Bank, worked for 16 years in the Civil Service (the Treasury, the DTI, the Civil Service College and the Central Statistical Office) and was an economics lecturer at Thames Polytechnic (now the University of Greenwich).

She is the author of many papers and articles on economic issues and has been a Governor of the London School of Economics and Council Member of the University of London.

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