The UK economy recovered to pre-pandemic levels after a surge of growth in November, however, the latest figures are yet to show what impact the Omicron variant has had on finances.
GDP grew by 0.9% in November, data from the Office for National Statistics shows, as the economy picked up after slowing to just 0.2% in October.
As such GDP is 0.7% above its level in February 2020, just before the first wave of Covid-19 pandemic hit – a milestone in the post-pandemic recovery process.
ONS chief economist Grant Fitzner said: “The economy grew strongly in the month before Omicron struck, with architects, retailers, couriers and accountants having a bumper month.
“Construction also recovered from several weak months as many raw materials became easier to get hold of.”
Ian Warwick, managing partner at Deepbridge Capital, added: “UK GDP growth rates reflect the impending rise in interest rates that many expect as inflation is set to push up further. 2022 is going to be quite a bumpy year for many businesses across the UK.
“It therefore remains critically important that scale-up businesses, particularly in high-growth sectors such as digital technologies and life sciences are supported as they will be at the very heart of economic growth as we create an economy fit for the twenty-first century.
“Government initiatives such as the Enterprise Investment Scheme (EIS) have never been more important for helping entrepreneurs and innovators source the funding they require, whilst also offering private investors with tax incentives to develop UK-supporting private equity portfolios. With our EIS funds reaching record levels of funding in 2020/21 it is evident that there is considerable demand from investors and financial advisers alike to invest in early-stage UK.”
Jesús Cabra Guisasola, senior associate at Validus Risk Management, concluded: “The UK economy continues its recovery and surpassed its pre-pandemic size with a growth of 0.9% during November 2021.
“This increase is higher compared to the growth during October 2021 (0.2%), mainly driven by the construction and manufacturing sectors. Nevertheless, we could expect GDP to slow down in December and January when the Omicron variant impacted the economy harder.
“GBP has been performing well during the last few weeks, testing 1.20 and 1.38 levels against the EUR and USD. However, there could be some downside risks for sterling if Andrew Bailey does not meet market’s expectations and the BoE does not deliver the hikes that most economists are pricing in for 2022.”
