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UK GDP data shows economy was slowing even before Omicron, says ONS

·2-min read
Chancellor of the Exchequer Rishi Sunak spoke to businesses and industry leaders last week (Stefan Rousseau/PA) (PA Wire)
Chancellor of the Exchequer Rishi Sunak spoke to businesses and industry leaders last week (Stefan Rousseau/PA) (PA Wire)

The UK economy was slowing down well before Omicron emerged, figures out today show, putting the recovery in clear jeopardy.

Figures from the Office for National Statistics (ONS) put GDP growth at 1.1% for the quarter to September, lower than a previous 1.3% estimate.

On the positive side, the whole economy is now just 1.5% smaller than it was pre-Covid in December 2019. That’s after the ONS upgraded its view of the economy’s growth in 2020.

ONS Director of Economic Statistics Darren Morgan said: "Our revised figures show UK GDP recovered a little slower in the third quarter, with much weaker performances from health and hairdressers across the quarter, and the energy sector contracting more in September than we previously estimated.

“However, stronger data for 2020 means the economy was closer to pre-pandemic levels in the third quarter.”

Experts say today’s figures don’t bode well for the fourth quarter, given the emergence of Omicron. That creates a further headache for Chancellor Rishi Sunak, who yesterday caved to pressure to provide some new business support but is facing calls for further bailouts.

Tony Russell, chief growth officer at Proteus said: “Economic growth stagnated in Q3, but the outlook for Q4 was more positive and expectations were that a more ‘bountiful Q4’ would help bring 2022 in on a high. The optimism has been mercilessly popped and it’s clear that Q4 is likely to pack an even more brutal punch.

“Many things are contributing to this economic slowdown; the new restrictions are damaging the retail and hospitality sectors, inflation is denting consumer confidence and spending power, and the supply shortages remain critical.”

Danni Hewson, AJ Bell financial analyst, said: “Household spend which had been a massive factor in the reopening boon has dropped significantly and with living standards being squeezed even more in the dying months of 2020 it’s clear that even if Covid hadn’t become a factor once again recovery was looking rather precarious.”

Capital Economics added: “Today’s release indicates the economy had a bit less momentum in Q3 than we had previously thought. And, with early signs the Omicron variant has hit activity, growth is sure to have slowed further in Q4.”

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