UK economic recovery stalls due to supply chain issues and job shortages

A business survey, reported by Sky News, has revealed that the UK's economic recovery stumbled in August as companies faced labour and supply shortages and rising COVID-19 case numbers deterred consumers.

The IHS Markit/CIPS Flash UK Composite PMI - an early indicator of economic health - gave a reading of 55.3 for August - the lowest since February and down from last month's 59.2.

Scores over 50 on the index represent growth while numbers under 50 represent an economic contraction.

The reading of 55.3 for the month was worse than the 58.4 figure pencilled in on average by experts polled by Reuters.

Britain's economy grew by a robust 4.8% in the second quarter of the year but remains more than 4% smaller than it was before the pandemic.

Issues such as the so-called "pingdemic" - causing staff to self-isolate due to COVID-19 alerts - and a global shortage of semiconductor chips used in products from smartphones to cars are among those holding the recovery back.

Chris Williamson, chief business economist at IHS Markit: "Despite COVID-19 containment measures easing to the lowest since the pandemic began, rising virus case numbers are deterring many forms of spending, notably by consumers, and have hit growth via worsening staff and supply shortages.

"Supplier delays have risen to a degree exceeded only once before - in the initial months of the pandemic - and the number of companies reporting that output had fallen due to staff or materials shortages has risen far above anything ever seen previously in more than 20 years of survey history."

The number of people testing positive for Covid in the UK rose 13.5 per cent to 227,391 in the past week, up to Sunday, according to the latest official figures. The latest data comes as food firms have sought to recruit prisoners to solve a deepening recruitment crisis.

Supply problems have forced Nando’s to temporarily shut outlets across Britain, and food industry bosses have warned more restaurants could close in the coming weeks.

Sector chiefs said Brexit was to blame for the nation’s supply chain woes – as the industry struggles to cope with production workers returning home to the EU and a drastic lack of lorry drivers able to come to the UK. The food industry has also been suffering from a longer-term shortage of labour that predates the pandemic and Brexit.

Nick Allen, chief executive at the British Meat Processors Association, told the Independent that the sector was struggling to get many product lines out to supermarkets and restaurants – with the UK’s meat production workforce down by up to 20 per cent.

“The supply problems are coming from the underlying labour problems happening since Brexit ... It’s certainly Brexit-related, but it’s also the immigration decisions our politicians are making since Brexit,” Mr Allen said.

He added: “Nando’s is the tip of the iceberg. I think we’re going to see more and more [closures]. Some people are still trying to open up their restaurants – but they’re struggling to get staff and struggling for deliveries.”