UK growth rate stutters

5th December 2021

The latest GDP statistics show the economy expanded by just 0.1% in October, much weaker than the 0.4% consensus forecast predicted in a Reuters poll of economists. Growth was largely
driven by a rise in face-to-face GP appointments at surgeries in England, although this was offset by a decline in industrial output, with production falling in both the electricity and gas, and mining and quarrying sectors.

In addition, a revision to previous GDP data revealed that the economy had actually grown at a slower pace during the third quarter. The new estimate puts July to September’s growth rate
at 1.1%, rather than 1.3% as initially thought. As a result, the UK economy remains 1.5% smaller than its pre-pandemic level.

 

More recently, economic activity has been hit by the spread of the Omicron variant. Preliminary data from last month’s IHS Markit/CIPS Purchasing Managers’ Index (PMI) pointed to a sharp slowdown in UK private sector growth as rising virus cases hit consumer services spending.

The flash reading of the PMI’s composite output index fell to a 10-month low of 53.2 in December, leading CIPS Group Director Duncan Brock to describe the data as “grim news” for the UK
economy. Mr Brook also said that positive gains over the last ten months had been “wiped out by yet another round of restrictions and curbs on consumers and businesses.”

Just before Christmas, the Chancellor unveiled a £1bn support package to help businesses hit by rising cases.