Economy grew faster after pandemic than estimated
Recovery from the pandemic was faster than previously estimated, according to revised figures from the Office for National Statistics.
Data shows that by the fourth quarter of 2021 the UK economy was 0.6% larger than pre-pandemic levels compared to a previous estimate that it was 1.2% smaller. The UK had the third fastest recovery in the G7 at that point, behind only the US and Canada.
The UK’s economy is now believed to have grown by 8.5% during 2021, compared to the previous estimate of 7.6%, the ONS said.
Chancellor Jeremy Hunt said: “The fact that the UK recovered from the pandemic much faster than thought shows that once again those determined to talk down the British economy have been proved wrong.
“There are many battles still to win, most of all against inflation so we can ease cost of living pressures on families.
“But if we stick to the plan we can look forward to healthy growth which according to the IMF will be faster than Germany, France, and Italy in the long term.”
Simon French, managing director and head of research at Panmure Gordon, said the better GDP profile was “good news for UK assets”, noting that sterling was likely to be the biggest beneficiary.
However, he said that the greater underlying strength in the UK economy risked prompting more hawkishness over interest rates from the Bank of England.
The emergence of better news on the economy comes ahead of the Scottish Government’s Programme for Government next week when the First Minister is expected to target the UK government’s track record on the economy since the pandemic and Britain’s withdrawal from the EU.
The SNP’s criticism of the Tory government in Westminster now risks looking a little hollow with data showing the economy returned to its pre-pandemic size almost two years ago and that the growth rate is likely to have surpassed Germany’s.