The UK financial system surpassed its pre-pandemic stage for the primary time in November after rising by 0.9% over the month, partly pushed by an sudden surge in early Christmas buying.
The Office for National Statistics (ONS) mentioned a bounce in restaurant bookings and a speedy turnaround in development output had been additionally behind the expansion that took the scale of the financial system 0.7% above its stage earlier than March 2020.
Metropolis economists had anticipated an enlargement of solely 0.4% and warned that November was prone to show a excessive level in 2020, 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 improve in well being companies as a proportion of financial exercise was one other issue supporting the rise in GDP, the ONS mentioned.
In opposition to 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 pinnacle of economics on the British Chambers of Commerce, mentioned: “Stronger development in November is prone to be adopted by a modest fall in output in December and January, as shopper warning to socialize and spend, and mounting employees 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 protracted provide chain disruption could imply that the UK’s financial development prospects stay underneath strain 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 pinnacle of financial analysis on the credit score insurer Euler Hermes, mentioned the patron had come to the rescue of an financial system nonetheless struggling the consequences of Covid-19
“We count on GDP development to hit 4.4% this yr, adopted by an extra 2.6% improve 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 complete financial system.
“Regardless of the Financial institution of England anticipated to lift charges a minimum of twice this yr 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 superb to see the scale of the financial system again to pre-pandemic ranges in November – a testomony to the grit and dedication of the British individuals,” he mentioned.
“The federal government is continuous to assist the financial system, together with by grants, loans and tax reliefs for companies, and our plan for jobs is making certain individuals 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’ll be able to.”