The UK economy expanded at the fastest pace since 1941 despite the Omicron variant acting as a drag on growth towards the end of the year, data from the Office for National Statistics showed Friday.
Gross domestic product grew by an estimated 7.5 percent in 2021, in contrast to the sharp 9.4 percent contraction in 2020. This was the biggest growth since 1941.
In December, GDP shrank 0.2 percent, reversing the revised 0.7 percent growth in November.
Services were the main contributor to GDP’s 0.2 percent fall in December as output fell 0.5 percent. Meanwhile, production output increased 0.3 percent with growth in three out of the four sub-sectors. Manufacturing gained 0.2 percent.
At the same time, construction output climbed 2.0 percent in December, following an increase of 1.9 percent in November.
In the fourth quarter, GDP grew 1 percent sequentially, the same pace of expansion as seen in the third quarter. Economists had forecast a quarterly growth of 1.1 percent.
Still the level of quarterly GDP in the fourth quarter was 0.4 percent below its pre-coronavirus level.
On a yearly basis, GDP grew 6.5 percent in the fourth quarter, slightly faster than the 6.4 percent expansion expected by economists.
When combined with the CPI inflation rate of 5.4 percent, the 0.2 percent fall in GDP in December meant that the economy experienced a taste of stagflation at the end of last year, Paul Dales, an economist at Capital Economics, said.
As it was driven by the Omicron COVID-19 wave which has now faded, the fall in GDP will soon be reversed, the economist noted. “But high inflation will be with us for longer and, together with the rise in taxes in April, will restrain GDP growth this year.”
Another report from the ONS showed that the visible trade deficit narrowed to GBP 12.35 billion in December from GBP 12.7 billion in November.
The services surplus totaled GBP 10.01 billion versus GBP 10.11 billion surplus in November.
As a result, overall trade balance, covering both goods and services, showed a deficit of GBP 2.34 billion compared to a GBP 2.58 billion deficit in the previous month.
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