UK economy bounced back in November – but that was before Omicron
Gross domestic product (GDP) is estimated to have grown by 0.9% in November 2021, according to the Office for National Statistics.
This is above its pre-coronavirus pandemic level (February 2020) for the first time, by 0.7%. However, the data relates to a time period before the Omicron variant hit the country.
Services (0.7%), production (1.0%) and construction (3.5%) output all increased between October and November 2021. This means that services and construction output are both 1.3% above their pre-coronavirus levels while production remains 2.6% below.
In the latest statistics, output in consumer-facing services grew by 0.8%, mainly because of a 1.4% increase in retail trade. All other services rose by 0.6%, with consumer-facing services still 5% below their pre-coronavirus levels, while all other services are 2.9% above.
Annabelle Williams, personal finance specialist at Nutmeg, said: “Despite fears that the new, highly transmissible variant of Covid-19 would force the economy to lock down once again, the Omicron variant has only had a modest impact on the economy so far.
“Many retailers have reported strong sales figures for the Christmas period and in total retail sales were 2.1% higher in December 2021 than in the previous year.
“The virus didn’t deter consumers from heading out to the shops, as in-store sales of non-food items rose 36% in December. That bodes well for the high street, which has faced a number of challenges including the coronavirus.”
Danni Hewson, financial analyst at AJ Bell, said: “It’s taken 20 volatile months for the UK economy to finally clamber back up to where it had been before Covid wrought its damage. The speed of growth has caught many by surprise considering the lacklustre figures delivered the previous month, although October’s number have been revised upwards to 0.2%.
“One noteworthy change is the easing of supply issues which have dogged the construction sector. It was one bright spot for the UK economy in the early days of the pandemic, but output has slipped in recent months as the world struggled to get goods where they needed to be, and prices went up accordingly. The majority of the new work was in infrastructure and house building is still down considerably on pre-pandemic levels despite the continued heat in the market and suggests the demand/supply equation won’t change any time soon.
“Most people totting up their Christmas spend won’t be surprised that retail also played a big part in boosting the UK economy in November. Consumers did spend early and lavishly and trading updates from many retailers suggest that spend did continue through December, but it begs the question of how much disposable income will be left to help the economy power into the new year particularly as those price increases in energy really begin to bite.”