The UK economy surpassed pre-pandemic levels for the first time in November after growing 0.9% over the month, driven in part by an unexpected surge in early Christmas shopping.
The Office for National Statistics (ONS) said an increase in restaurant bookings and a rapid turnaround in construction output also lagged behind growth, which saw the size of the economy grow 0.7% above pre-March 2020 levels.
The city’s economists had expected an expansion of just 0.4% and warned that November was likely to prove to be the high point in 2021, as the numbers gathered by the ONS came close to the launch of the Omicron variant, exacerbating labor shortages , with thousands sick, forcing the government to introduce Plan B restrictions. This was followed by growth of 0.2% in October.
The continued increase in health services relative to economic activity was another factor that helped boost GDP, the ONS said.
Against the background of rising inflation and the threat of further interest rates from the Bank of England, corporate groups warned that the economy was still weak.
Suren Thiru, Head of Commerce at the UK Chamber of Commerce, said: “Stronger growth in November is likely to be followed by a modest decline in production in December and January as consumers are wary of socializing and spending and increasing employee absences were triggered by Omicron and Plan B limit activity.
“While the UK economy should recover once Plan B measures are lifted, soaring inflation and ongoing supply chain disruption could put UK growth prospects under pressure for much of 2022.”
Analysts said that while the economy has struggled to grow since the summer, there is a prospect of a return to stronger growth in 2022 if the rising cost of living also constrains consumer spending.
Ana Boata, head of economic research at credit insurer Euler Hermes, said the consumer came to the rescue of an economy still suffering from the effects of Covid-19
“We expect GDP growth of 4.4% this year, followed by a further increase of 2.6% in 2023. It is not all smooth, however. In response to price increases across the economy, wages will rise around 3.5% above the pre-crisis average in 2022.
“Although the Bank of England expects to hike rates at least twice this year to keep inflation in check, real household purchasing power will suffer, so excess savings support consumer spending.”
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Chancellor Rishi Sunak welcomed the news that the UK economy was bigger than it was before the pandemic.
“It is amazing how big the economy returned to pre-pandemic levels in November – 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 plan for jobs is to provide people across the country with fantastic opportunities.
“We all have an important role to play in protecting lives and jobs, and I urge everyone to do their part by promoting it as soon as possible.”
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