The UK financial system surpassed its pre-pandemic degree for the primary time in November after rising by 0.9% over the month, partly pushed by an surprising surge in early Christmas buying.
The Office for National Statistics (ONS) mentioned a leap in restaurant bookings and a fast turnaround in building output had been additionally behind the expansion that took the scale of the financial system 0.7% above its degree earlier than March 2020.
Metropolis economists had anticipated an enlargement of solely 0.4% and warned that November was more likely to show a excessive level in 2021, with the figures collected by the ONS coming shortly earlier than the Omicron variant took maintain, exacerbating employee shortages as hundreds had been off sick, and forcing the federal government to introduce plan B restrictions. It adopted development of 0.2% in October.
The persevering with enhance in well being providers as a proportion of financial exercise was one other issue supporting the rise in GDP, the ONS mentioned.
Towards a backdrop of rising inflation and the specter of additional rates of interest by the Financial institution of England, enterprise teams warned the financial system remained weak.
Suren Thiru, the top of economics on the British Chambers of Commerce, mentioned: “Stronger development in November is more likely to be adopted by a modest fall in output in December and January, as shopper warning to socialize and spend, and mounting workers absences sparked by Omicron and plan B restrict exercise.
“Whereas the UK financial system ought to rebound as soon as plan B measures are lifted, surging inflation and chronic provide chain disruption could imply that the UK’s financial development prospects stay underneath stress for a lot of 2022.”
Analysts mentioned that whereas the financial system had struggled to develop for the reason that summer time, there was the prospect of a return to stronger development in 2022, albeit with shopper spending constrained by the rising value of residing.
Ana Boata, the top of financial analysis on the credit score insurer Euler Hermes, mentioned the buyer had come to the rescue of an financial system nonetheless struggling the results of Covid-19
“We anticipate GDP development to hit 4.4% this 12 months, adopted by an additional 2.6% enhance in 2023. It’s not all plain crusing, although. Wages will go up round 3.5% above the pre-crisis common in 2022, in response to cost rises throughout the total financial system.
“Regardless of the Financial institution of England anticipated to lift charges a minimum of twice this 12 months to maintain inflation in examine, households’ actual buying energy will endure, leaving extra financial savings to prop up shopper spending ranges.”
The chancellor, Rishi Sunak, welcomed the information that Britain’s financial system was bigger than earlier than the pandemic.
“It’s wonderful to see the scale of the financial system again to pre-pandemic ranges in November – a testomony to the grit and willpower of the British folks,” he mentioned.
“The federal government is constant to help the financial system, together with via grants, loans and tax reliefs for companies, and our plan for jobs is guaranteeing folks up and down the nation have incredible alternatives.
“All of us have a significant half to play to guard lives and jobs, and I urge everybody to do theirs by getting boosted as quickly as you may.”