UK growth spurt in November unfortunately overtaken by Omicron variant, warns Alpesh Paleja, CBI chief economist.
Supply chain issues and the cost of living crisis are also weighing on growth, Paleja Explain :
“While it is good that economic growth picked up in November, the data has been overtaken by events. It is very likely that activity took a hit in December as the spread of the Omicron variant and subsequent restrictions disrupted operations in some sectors.
“As we enter the new year, the near-term outlook is also clouded by additional challenges: labor shortages – exacerbated by sickness absence, supply chain disruptions and the cost crisis life for households.
“Implementing Plan B in December was the right thing to do, but with Covid clearly here to stay, the Government must now act to avoid the need for further activity restrictions. This includes providing clearer forward guidance to support business adaptation, prioritizing mass testing over mass self-isolation, and ensuring travel controls are proportionate so that the UK Uni remains open to the rest of the world.
Chancellor of the Exchequer Rishi Sunak welcomed the news that the UK economy is bigger than before the pandemic:
“It’s amazing to see the size of the economy return to pre-pandemic levels in November – a testament to the courage and determination of the British people.
“The government continues to support the economy, including through grants, loans and tax breaks for businesses, and our jobs plan is ensuring people across the country have fantastic opportunities.
“We all have a vital role to play in protecting lives and jobs, and I urge everyone to do theirs by getting boosted as soon as possible.”
Introduction: UK economy back to pre-COVID-19 levels
Britain’s economy has returned to pre-pandemic levels, following a growth spurt in November.
UK GDP rose 0.9% in November, according to data from the Office for National Statistics, as the economy picked up after slowing to just 0.2% in October.
This means UK GDP is 0.7% higher than its February 2020 level, just before the first wave of the Covid-19 pandemic hit – a milestone in the post-pandemic recovery.
However, this takeover came just before the Omicron variant arrived in the UK, causing disruption in December.
The ONS reports that the services, manufacturing and construction sectors all expanded in November, while the retail sector saw strong growth.
- Services (0.7%), production (1.0%) and construction (3.5%) all increased between October and November 2021; this means that services and construction output are both 1.3% higher than their pre-coronavirus levels, while output remains 2.6% lower.
- In the past month, output of consumer services increased by 0.8%, mainly due to a 1.4% increase in retail trade, while all other services increased by 0.6%. %; consumer services are still 5.0% below their pre-coronavirus levels, while all other services are 2.9% higher.
We’ll be gathering more details and feedback now.
Also coming today
China posted a record trade surplus in December and 2021, with exports up 20.9% year-on-year last month and imports up 19.5%.
Trade data from the UK and the Eurozone today will show how Covid and Brexit weighed on trade in November.
New data on US retail sales and consumer confidence will highlight whether Omicron has hurt the US economy.
European stock markets are expected to start lower, after another choppy trading day on Wall Street. The technology-focused Nasdaq index fell 2.5% to its lowest level since October.
On the corporate side, Blackrock, Citi, JP Morgan and Wells Fargo report fourth quarter financial results.
- 9am GMT: Germany’s annual GDP report
- 10 a.m. GMT: Eurozone trade balance for November
- 1:30 p.m. GMT: US retail sales for December
- 2:15 p.m. GMT: US industrial production for December
- 15:00 GMT: Michigan survey of US consumer sentiment in January