UK Economy Returns to Pre-COVID Levels

The U.K. economy surged past its pre-pandemic level for the first time in almost two years in November when it grew 0.9% in the month, in part because shoppers decided to start their holiday gift hunts earlier than they had in the past, according to a report in The Guardian Friday (Jan. 14).

The region also saw higher restaurant reservations and a quicker construction turnaround to help its economic recovery, ending November 0.7% higher than it was before March 2020, the report says. The surge was significantly higher than the projection of 0.4%, which came before the omicron variant.

The increase in health services is another reason for the swift uptick in November, according to the Office of National Statistics.

Still, economists say rising inflation and possible higher interest rates by the Bank of England mean the economy is still languishing.

“Stronger growth in November is likely to be followed by a modest fall in output in December and January, as consumer caution to socialize and spend, and mounting staff absences sparked by Omicron and plan B limit activity,” said Suren Thiru, head of economics at the British Chambers of Commerce.

“While the UK economy should rebound once plan B measures are lifted, surging inflation and persistent supply chain disruption may mean that the UK’s economic growth prospects remain under pressure for much of 2022,” he said.

Related: UK Omicron Staffing Issues Could Lead to $48B in Output Losses

Meanwhile, omicron-related staff shortages in the U.K., including illnesses as well as mandatory isolation, might end up cutting $48 billion in output in January and February, Bloomberg reported Sunday (Jan. 9).

The Centre for Economics and Business Research said the U.K.’s losses in output could be made up during the rest of the year.

PYMNTS wrote in December that the U.K. had seen lower sales during Christmas weekend than usual because of the omicron variant, a 45% decrease. In Central London, reports said one in 20 people had been infected with the new variant. On Boxing Day, Oxford Street saw less traffic, and some stores like Marks and Spencer, John Lewis and Next were closed.