It may look like a small change on the surface but it comes with some potentially big consequences moving forward. In the preliminary report, UK Q2 GDP was estimated to have contracted by 0.1% but overall GDP was estimated to be 0.6% above Q4 2019 i.e. pre-pandemic levels. However, after the revision above, overall GDP is estimated to be 0.2% lower than Q4 2019 despite a positive revision to 0.2% growth in Q2 GDP.
So, what exactly does this say about the UK economy and future projections?
This likely implies that the impact from the pandemic (and Brexit to some extent) is much more profound than initially estimated. That points to deeper economic scarring and arguably stronger negative effects on the UK economy as a whole. As such, that might play into softer projections in terms of growth potential – something which may need to be accounted for as Truss and Kwarteng meets up with the OBR. Let’s see.