The UK economy surged by a record 15.5% between July and September as Britain rebounded out of recession but the recovery slowed sharply even before the second lockdown, official figures show.

The Office for National Statistics (ONS) said the third-quarter growth was the highest since records began in 1955 and came as restrictions eased after the spring lockdown.

It saw the economy bounce back from the 19.8% contraction in the second quarter, which plunged the UK into a record-breaking recession.

But month-on-month growth slowed to 1.1% in September as the Government’s Eat Out To Help Out hospitality-boosting scheme ended and the ONS revealed that gross domestic product (GDP) was still 8.2% below levels seen in February before the crisis struck.

Jonathan Athow, deputy national statistician at the ONS, said: “While all main sectors of the economy continued to recover, the rate of growth slowed again, with the economy still remaining well below its pre-pandemic peak.

“The return of children to school boosted activity in the education sector.

“Housebuilding also continued to recover while business strengthened for lawyers and accountants after a poor August.

“However, pubs and restaurants saw less business after the Eat Out To Help Out scheme ended, and accommodation saw less business after a successful summer.”

The September slowdown was more severe than expected, with the ONS confirming there was a “loss in momentum across all main sectors” since June.

Impact of the second lockdown

Chancellor Rishi Sunak warned that growth was likely to slow further over the fourth quarter and said there are “hard times ahead”.

Experts are forecasting a sharp fall in GDP this month caused by the second English lockdown, amid fears of a double-dip recession.

Mr Sunak said: “Today’s figures show that our economy was recovering over the summer, but started to slow going into autumn.

“The steps we’ve had to take since to halt the spread of the virus mean growth has likely slowed further since then.

“But there are reasons to be cautiously optimistic on the health side – including promising news on tests and vaccines.”

The pound was 0.3% lower at 1.32 US dollars and 0.4% down at 1.1 euros after the data.

The Bank of England last week forecast the economy will shrink by 2% in the final quarter of the year.

It believes the UK will avoid plunging back into recession, pencilling in growth of 2.4% in the first quarter of 2021.

But the economy’s performance will depend heavily on restrictions to control the spread of the virus.

Samuel Tombs, at Pantheon Macroeconomics, cautioned growth will probably not recover to September’s level until next spring.

The ONS data showed the services sector, which accounts for around three quarters of UK output, grew by 14.2% in the third quarter.

On a monthly basis, services growth slowed significantly to 1% in September from 2.4% in August.

The sector remains 8.8% lower than in February, before the main impact of the coronavirus crisis.

The ONS said production including manufacturing expanded by 0.5% and construction by 2.9% in September.

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