UK growth virtually stalled in October, even before Omicron

GDP rise of only 0.1% weaker than expected, with number of people dining out falling

  • Business live updates: UK economy barely grew in October
  • Coronavirus – latest updates
  • See all our coronavirus coverage

Last modified on Fri 10 Dec 2021 03.45 EST

Britain’s economic recovery had almost come to a halt even before the onset of the new Omicron variant of Covid-19, official figures have shown.

The Office for National Statistics said in October – the first month after the end of the government’s furlough scheme – output grew by only 0.1%.

The slight monthly rise in gross domestic product was weaker than had been anticipated, with a poll of economists having expected growth of 0.4%. In September the economy grew by 0.6%.

A breakdown of the data showed signs of a sharp drop in people going to restaurants, pubs and bars even before tougher curbs were brought in this month. Gross domestic product was still 0.5% below its pre-crisis peak in February 2020 at the end of October.

Of the three main sectors of the economy, only services expanded in October, with higher spending in the shops and an increase in face-to-face GP appointments contributing to a 0.4% rise.

However, production – which includes manufacturing, energy and North Sea oil and gas – was down 0.6%, while a shortage of materials because of supply chain problems resulted in a 1.8% drop in construction output, the steepest since the start of the pandemic in April 2020.

Grant Fitzner, the chief economist at the ONS, said: “While GDP growth slowed in October, the UK health sector again grew strongly while secondhand car sales and employment agencies also boosted the economy. Taken as a whole, the dominant services sector reached its pre-pandemic level for the first time in 20 months.

“These gains were offset by a drop in restaurants, which fell back after a strong summer, and reduced oil extraction and gas use. Construction also saw its biggest drop since April last year, with notable falls in housebuilding and infrastructure work, partly driven by shortages in raw materials.”

Over the three months to October, the economy expanded by 0.9% – a marked slowdown on the growth rates posted as it emerged from lockdown in the spring and summer.

Rishi Sunak, the chancellor, said: “We’ve always acknowledged there could be bumps on our road to recovery but the early actions we have taken, our ongoing £400bn economic support package and our vaccine programme mean we are well placed to keep our economy on track.

“We have still been recovering quicker than expected, with more employees on payrolls than ever before and redundancies remaining low.”

Alpesh Paleja, the lead economist at the lobby group the CBI, said: “Growth disappointed in October, reinforcing concerns about the resilience of the UK’s economic recovery to the Omicron variant and the impact of further restrictions.”

Source: Read Full Article