In November, the month before Omicron swept through Britain, the nation’s economy reached a milestone: It surpassed its prepandemic size for the first time.
According to the Office for National Statistics the gross domestic product increased by 0.9 per cent in November compared to November 2013. Construction and manufacturing sectors returned to growth as some businesses were less affected due to supply shortages. Important contributors were also wholesale and retail businesses.
So, the economy was 0.7% larger than it was in February 2020 before the pandemic plunged Britain deep into recession.
If the economy doesn’t shrink by more that 0.2 percent in December and there are no more data revisions then the quarterly G.D.P. According to the statistics office, for the three last months of the year, the more traditional statistic will also surpass its prepandemic level.
However, the British economy will take a blow in December. Omicron drove coronavirus cases up to new records, the government ordered people to work from home, restaurants, bars were closed, staff shortages were widespread, and the Treasury had the need to revive some financial support for businesses affected by the pandemic.
The Bank of England lowered its fourth quarter growth forecast by half percent in December. This would mean that the economy would be 1.5 percent smaller than its pre-crisis size. The central bank stated that the economy would be affected by measures taken by the government and voluntary social ditancing in the first quarter.
The daily Covid cases are falling in Britain again, but the economy faces other obstacles in the coming months. Households will see a significant increase in their cost of living. Inflation is expected to peak at 6 percent in spring. Energy bills are expected to rise dramatically and tax increases are imminent.
“Omicron looks set to fade almost as quickly as it arrived, thanks partly to the rapid rollout of booster jabs,” Samuel Tombs, an economist at Pantheon Macroeconomics, wrote in a note to clients. He predicted that economic output would rebound in February.
But growth from the middle of the year “likely will be sluggish, as households’ real incomes are squeezed by high inflation and taxes, and exports remain constrained by Brexit,” he added.
Source: NY Times