This page provides commentary and charts on the latest changes in the UK economy, using novel and rapid data sources as well as official statistics.
We explain the reasons behind each change as much as possible, although it can be difficult to separate the impacts of different things such as Brexit and COVID-19.
For an overview of our main economic indicators, visit our dashboard.
Latest headlines21 September 2021
- Hospitality businesses are most likely to be struggling to fill vacancies
- Over 20,000 company dissolution first gazettes in week to 7 September
This page was last updated at 07:00 on 21 September 2021.
August borrowing the second highest on record, behind 2020
21 September 2021
In August 2021, the UK public sector borrowed £20.5 billion, the second highest August borrowing on record. Although this was £5.5 billion less than the £26.1 billion borrowed in August 2020, it is still £15.3 billion more than that of August 2019.
Borrowing makes up the shortfall between spending by the government and other public sector organisations and its income such as taxes.
Central government receipts were £61.2 billion in August 2021, £5.3 billion more than in August 2020. Of these receipts, tax revenue was £45.0 billion, a £4.1 billion increase compared to a year earlier.
Central government bodies spent £79.6 billion in August 2021, £1.0 billion less than in August 2020, with the £2.9 billion rise in debt interest costs offset by the £4.9 billion fall in spending on the job furlough schemes.
Borrowing in the financial year-to-August 2021 was £93.8 billion, £88.9 billion less than the £182.7 billion borrowed in the same period last year and £31.8 billion less than the official forecast.
This month, as a part of our annual update strategy we have introduced several significant classification and methodological revisions to our public sector finance estimates.
Largely as a result of these planned changes, borrowing in the financial year ending (FYE) March 2021 increased by £27.1 billion to £325.1 billion since our last publication (20 August 2021). This revision included the recording of the expected £20.9 billion cost of the government loan guarantee schemes for the first time.
Borrowing in FYE March 2021 now stands at £15.5% of GDP (revised up from 14.2%), the highest borrowing to GDP ratio since the end of World War II (22.4% in FYE 1945).
The recent substantial increase in borrowing has led to sharp increase in public sector net debt which currently stands at 97.6% of GDP, the highest ratio since the 98.3% recorded in March 1963.
Retail sales continue to fall as COVID-19 restrictions ease
17 September 2021
Retail sales volumes fell by 0.9% on a monthly basis in August 2021 but remained 4.6% higher than pre-pandemic levels (February 2020).
Food store sales volumes fell by 1.2% compared with the previous month. This may be the result of the further lifting of hospitality restrictions, as more people increased their spending on activities such as eating out. The trend is supported by data from Open Table and data on UK spending on debit and credit cards (CHAPS).
Non-food store sales volumes dropped by 1.0% in August 2021. Department stores experienced the largest fall (negative 3.7%), followed by other non-food stores (negative 1.2%) and household goods stores (negative 0.5%). Only clothing stores reported growth, with a monthly increase of 0.7%.
Automotive fuel sales volumes saw growth of 1.5% compared with July 2021 as a result of an increase in travel and the lifting of coronavirus restrictions. However, volumes are still 1.2% below pre-pandemic levels (February 2020).
The effects of recent supply chain disruptions were evident in August. Across businesses in the retail industry, 6.5% reported difficulties in finding materials, goods and services in the two weeks between 9 and 22 August. Furthermore, 8.9% reported they had to find alternative solutions or change suppliers to avoid potential disruptions.
The proportion of online retail spending values increased to 27.7% in August 2021, from 27.1% in July, although it is below the peak pandemic level of 36.5% (February 2021).
Hospitality businesses are most likely to be struggling to fill vacancies
16 September 2021
Hospitality businesses are more than twice as likely as other industries to be experiencing challenges in filling vacancies compared with normal expectations for this time of year.
Between 23 August and 5 September 2021, 30% of hospitality businesses said that vacancies were more difficult to fill than normal. This compares with 13% across all industries (up from 9% in early August).
These difficulties coincide with a very busy time for recruitment, according to the latest labour market data, with hospitality among several industries posting record numbers of vacancies in June to August 2021.
While vacancies are at record levels, the total number of employees on UK payrolls is around the same as it was in February 2020.
Among industries, payrolled employment was generally rising in August 2021, but remained below pre-pandemic levels by as much as 6.0% in hospitality and 10.2% in arts and recreation.
Vacancies are above pre-pandemic levels, but the number of payrolled employees is yet to recover in some industries
Vacancies by selected industry, UK, December 2019 to February 2020 to June to August 2021, Index Jan-Mar 2020 = 100; Payrolled employment by selected industry, UK, February 2020 to August 2021, Index Feb 2020 = 100
The difference between the rate of growth in vacancies compared with payrolled employment may reflect the time it takes to fill jobs, as well as recruitment challenges.
In industries such as hospitality and arts and recreation, the number of employees on payrolls is rising, suggesting that vacancies are gradually being filled.
However, in the transport and storage industry, the number of people on payrolls is falling while vacancies are increasing. This suggests a gap between industry demand for workers and their availability.
Over 20,000 company dissolution first gazettes in week to 7 September
16 September 2021
There were 20,503 compulsory dissolution first gazettes in the week to 7 September 2021.
This new weekly indicator in collaboration with Companies House shows the number of company compulsory dissolution first gazettes issued in the UK.
Compulsory dissolution first gazette statistics help show a fuller picture of business in the UK by providing an indicator of potential company closure in addition to voluntary dissolution applications which can be found in the accompanying dataset.
Companies House paused the issuing of compulsory dissolution first gazettes between 16 March and 10 October 2020, and between 21 January and 8 March 2021. This means that the cumulative total since the start of the year is now 343,787. This cumulative annual figure is 30% and 26% higher than the pre-pandemic years of 2018 and 2019, respectively.
UK average house prices increased by 8.0% over the year to July 2021
15 September 2021
The UK’s average house price increased by 8.0% over the year to July, down from 13.1% in the year to June 2021. The UK average house price for July 2021 was £256,000, which is £19,000 higher than this time last year, following the record high of £265,000 in June 2021.
The temporary changes to Stamp Duty, Land and Buildings Transaction Tax and Land Transaction Tax may have allowed sellers to request higher prices as buyers’ overall costs are reduced. As the tax breaks were originally due to conclude at the end of March 2021, it is likely that March’s average house prices were slightly inflated as buyers rushed to ensure their house purchases were scheduled to complete ahead of this deadline. This effect was then further exaggerated in June 2021, in line with the extension to the holiday on taxes paid on property purchases in England, Wales and Northern Ireland. Average house prices for July returned to similar levels seen earlier in the year.
Private rental prices paid by tenants in the UK rose by 1.3% in the 12 months to August 2021, unchanged since July 2021. The beginning of 2021 saw a slowdown in rental price growth, which was driven by prices in London.
London’s rental price growth in August 2021 (negative 0.4%) is lower than any other English region. This reflects a decrease in demand, partly because of the adaptation of remote working meaning that workers no longer need to be close to their offices. It also reflects an increase in supply, such as an excess supply of rental properties as short-term lets change to long-term lets.
One year on, the effect of Eat Out to Help Out increases the August 12-month inflation rate
15 September 2021
In August 2020, both Eat Out to Help Out (EOHO) and to a lesser extent the Value Added Tax (VAT) cut drove down the price of eating out in restaurants, hotels and cafés. In August 2021, these prices had increased. This means that when making year-on-year comparisons there is a large difference. The result is a high inflation rate. This is known as a base effect. The chart illustrates the extent to which the EOHO scheme impacted the overall inflation rate.
In August 2021, this base effect partly caused the Consumer Prices Index including owner occupiers’ housing costs (CPIH) to reach 3.0%. This is up from 2.1% in July and is the largest increase ever recorded in the CPIH National Statistic 12-month inflation rate series, which began in January 2006, although this effect is likely to be temporary. The Consumer Prices Index (CPI) also rose in the same period, this time to 3.2%. This effect is unlikely to be present after August 2021.
The contribution from restaurants and hotels increased in August 2021. This is the largest contribution that this division has ever made to the CPIH annual rate. Other upward contributions to the CPIH 12-month inflation rate came from transport, with further large upward contributions from restaurants and hotels, housing and household services, and recreation and culture.