2.29 a.m. IS02:29
The UK’s growth spurt in November has unfortunately been overtaken by the Omicron variant, warns Alpesh Paleja, CBI senior economist.
Supply chain problems and the cost of living crisis also weigh on growth, Paleja explained:
“While it is good that economic growth picked up in November, events have overtaken the data. Activities are likely to have hit hard in December as the proliferation of the Omicron variant and subsequent restrictions disrupted operations in certain sectors.
“At the beginning of the new year, the short-term prospects are also clouded by additional challenges: labor shortages – exacerbated by sickness-related absenteeism, interruptions in the supply chain and a crisis in the cost of living for households.
“The implementation of Plan B in December was correct, but with Covid clearly staying here, the government must act now to prevent the need for further activity restrictions. This includes providing clearer forward-looking guidelines to support business adaptation, prioritizing mass testing over mass self-isolation and ensuring that travel controls are proportionate to keep the UK open to the rest of the world. “
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Chancellor of the Exchequer Rishi Sunak has welcomed the news that the UK economy is bigger than it was before the pandemic:
“It is amazing to see the economy return to pre-pandemic levels in November – a testament to the courage and determination of the British people.
“The government continues to support the economy, including through grants, loans and tax breaks for businesses, and our Plan for Jobs ensures people across the country have 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.”
2.11 a.m. IS02:11
Introduction: The UK economy is recovering to pre-Covid-19 levels
The UK economy has recovered to pre-pandemic levels after spurting growth in November.
UK GDP grew 0.9% in November, data from the Office for National Statistics shows, as the economy recovered after slowing to just 0.2% in October.
That means UK GDP is 0.7% above its February 2020 level, just before the first wave of the Covid-19 pandemic hit – a milestone in the pandemic recovery.
UK GDP Photo: ONS
That rebound came just before the Omicron variant hit the UK, however, causing disruption in December.
The UK economy accelerated growth in November before the Omicron variant hit, surpassing pre-pandemic levels for the first time.
January 14, 2022
The ONS reports that the services, manufacturing and construction sectors all grew in November, while retail grew strongly.
- Services (0.7%), manufacturing (1.0%) and construction output (3.5%) all increased between October and November 2021; this means that both services and construction are 1.3% above their pre-coronavirus levels, while production is 2.6% below.
- Last month, output in consumer services increased 0.8%, mainly due to a 1.4% increase in retail, while all other services increased 0.6%; Consumer-facing services are still 5.0% below their pre-coronavirus levels, while all other services are 2.9% above.
We will now gather more details and reactions.
Come today too
China posted record trade surpluses in December and 2021, with exports increasing 20.9% year over year and imports increasing 19.5% last month.
Today’s UK and Eurozone trade data will show how Covid and Brexit weighed on trade in November.
New U.S. retail sales and consumer confidence data will reveal whether Omicron has hurt the American economy.
European stock markets are set for a lower start after another day of troubled trading on Wall Street. The technology-driven Nasdaq index fell 2.5% to its lowest level since October.
On the corporate side, Blackrock, Citi, JP Morgan and Wells Fargo release fourth quarter financial results.
- 9 a.m. GMT: Germany’s full annual GDP report
- 10 a.m. GMT: Eurozone trade balance for November
- 1:30 p.m. GMT: December US retail sales
- 2:15 p.m. GMT: US industrial production for December
- 15:00 GMT: Michigan January US Consumer Sentiment Poll
Updated at 2:13 p.m. EST