GDP growth likely to slow after November uplift

Shop and mask
Tougher restrictions last month are likely to have slowed growth (pic: Terry Murden)

Britain’s economy grew beyond pre-Covid levels for the first time in November, up 0.9%, which was higher than economists’ expectations and meant the economy was 0.7% larger than in February 2020.

Chancellor Rishi Sunak said: “It’s amazing to see the size of the economy back to pre-pandemic levels in November – a testament to the grit and determination of the British people.”

However, growth is likely to have slowed in December after the spread of Omicron and the introduction of Plan Bmeasures.

Danni Hewson, AJ Bell financial analyst, said: “It’s impossible not to look at this latest set of figures and not feel a sense of inevitability. 

“December will have dragged the economy backwards; the question is by how much? Which sectors will have been able to push through the latest restrictions?  Which will have been impacted by worker illness or dwindling consumer confidence? And why has it taken so long for the production sector to recover in the same way other parts of the economy have done?

Alpesh Paleja, CBI lead economist, said: “While it’s good that economic growth picked up in November, the data has been overtaken by events. Activity is very likely to have taken a hit in December, as the spread of the Omicron variant and subsequent restrictions disrupted operations in certain sectors. 

“As we kick off the new year, the near-term outlook is also clouded by additional challenges: shortages of labour – exacerbated by sickness absence, supply chain disruption and a cost of living crunch for households.”

Suren Thiru, head of economics at the British Chambers of Commerce, added: “Stronger growth in November is likely to be followed by a modest fall in output in December and January, as consumer caution to socialise and spend, and mounting staff absences sparked by Omicron and Plan B limit activity. 

“While the UK economy should rebound once Plan B measures are lifted, surging inflation and persistent supply chain disruption may mean that the UK’s economic growth prospects remain under pressure for much of 2022.”

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