UK economy returns to pre-pandemic levels in November | Economic growth (GDP)
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Britain’s economy surpassed its pre-pandemic level for the first time in November after increasing 0.9% in the month, in part thanks to an unexpected increase in advance Christmas shopping.
The Office for National Statistics (ONS) said an increase in restaurant reservations and a rapid upturn in construction output were also behind the growth that pushed the size of the economy to exceed 0, 7% compared to its level before March 2020.
City economists had expected an expansion of just 0.4% and warned that November would likely be a peak in 2020, with figures collected by the ONS coming shortly before the Omicron variant took hold. , exacerbating worker shortages when thousands were sick, and forcing the government to introduce Plan B restrictions. It follows a 0.2% growth in October.
The continued increase in health services as a proportion of economic activity has been another factor supporting the rise in GDP, the ONS said.
Amid rising inflation and threat of interest rate hikes from the Bank of England, business groups have warned the economy remains weak.
Suren Thiru, head of economics at the UK Chambers of Commerce, said: “Stronger growth in November will likely be followed by a modest drop in output in December and January, as consumers’ caution to socialize and spend, and the increase in staff absences triggered by Omicron and Plan B are limiting activity.
“While the UK economy is expected to rebound once Plan B measures are lifted, soaring inflation and continued supply chain disruption could mean that the UK’s economic growth outlook will remain under pressure for a while. much of 2022. ”
Analysts said while the economy had struggled to grow since the summer, there was the prospect of a return to stronger growth in 2022, although consumer spending was constrained by the rising cost. of life.
Ana Boata, head of economic research at credit insurer Euler Hermes, said consumers have come to the rescue of an economy still suffering from the effects of Covid-19
“We expect GDP growth to reach 4.4% this year, followed by a further 2.6% increase in 2023. It’s not all straightforward, however. Wages will rise about 3.5% above the pre-crisis average in 2022, in response to rising prices across the economy.
“Although the Bank of England has planned to hike rates at least twice this year to control inflation, the real purchasing power of households will suffer, leaving excess savings to support levels of consumer spending. “
Chancellor Rishi Sunak hailed the news that the UK economy was bigger than before the pandemic.
“It is incredible 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,” he said.
“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 being boosted as soon as possible.”
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