Yahoo Finance Omicron slows growth at UK companies
Private sector growth in Britain slowed in the three months to January, according to the latest indicator from the Confederation of British Industry (CBI).
It was the second consecutive survey in which growth had eased, with the figure coming in at 12% compared to 21% in the quarter to December.
The figures were also the slowest rate of growth since the three months to April 2021.
Only the distribution sector saw faster growth than the previous rolling quarter, up 38% from a previous 21%. In contrast, growth in manufacturing output eased, up just 14% compared to 29%, and business and professional services volumes also slowed to 9% from 16%.
Consumer services activity fell for the first time since the three months to June 2021, a reading of -23% from +23% in December, bearing the brunt of Plan B restrictions and general Omicron caution.
Private sector activity is expected to grow at a similarly modest pace in the next three months at 10%, the CBI said, marking the lowest expectations for growth since the quarter to February 2021.
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The measure was based on responses to CBI surveys from 477 firms between 20 December 2021 and 17 January 2022. The latest survey was the first to fully reflect the impact of the Omicron variant of COVID-19 and Plan B restrictions announced in December.
Looking ahead, manufacturers, and business and professional services firms expect a faster rate of growth in the next three months, at 23% and 15% respectively. This is despite facing rising cost pressures.
Distribution firms expect growth to ease slightly (+33%), while consumer services activity is expected to fall at an even faster rate (-53%).
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“Private sector growth weakened substantially across most sectors in the quarter to January, and expectations for the three months ahead have softened notably,” Alpesh Paleja, CBI Lead Economist, said.
“Consumer-facing firms will also have to contend with a deepening squeeze on household budgets, as rising energy prices and, more broadly, higher inflation start to bite. Expanding the Warm Home Discount and cutting VAT from consumer energy bills for 2022 can help ease pressure on the most vulnerable.
He added: “To ensure businesses are well placed to support the recovery and compete globally, maintaining and expanding their access to the Recovery Loan Scheme is essential, as is compensation for Energy Intensive Industries for indirect emissions costs.”
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