Economy rebounds despite minor fall in December

The UK economy rebounded last year with growth of 7.5 percent despite falling back in December due to shortages of goods in the shops in the run-up to Christmas and a record number of job vacancies, official figures showed today (11).

In December, the economy shrank 0.2 percent as Omicron restrictions hit the hospitality and retail sectors.

The slump came after a 0.9 percent increase in November. City economists polled by Reuters expected a more severe drop of 0.6 percent.

Services output fell 0.5 percent, driven by a 3.2 percent drop in wholesale and retail trade, where footfall was affected by the spread of the Omicron variant. Accommodation and food services output dropped 9.2 percent as people cancelled trips and stayed away from pubs and restaurants.

Britain may have suffered a smaller economic hit than feared in December as COVID-19 cases mounted, capping a historic two-year collapse and rebound for the world's fifth-biggest economy, but surging inflation is set to slow the recovery in 2022.

The quarterly pace of expansion held steady at 1.0%, helped by the public health service, couriers and employment agencies.

December GDP matched its level in February 2020, just before the pandemic struck. Output in the fourth quarter was slightly below that in the final three months of 2019.

The economy grew 7.5 percent in 2021 - the biggest annual rise since 1941, when Britain was rearming during World War Two - after a 9.4 percent collapse in 2020, the largest since the aftermath of World War One.

“GDP fell back slightly in December as the Omicron wave hit with retail and hospitality seeing the biggest impacts,” Darren Morgan, the ONS’s director of economic statistics, said. “However, these were partially offset by increases in the test and trace service and vaccination programmes.”