UK economic growth slows sharply as supply chain problems bite

The UK financial system hardly grew in October as provide chain disruption hit manufacturing and development, whereas the enlargement of the providers sector slowed.

UK output rose simply 0.1 per cent per between September and October, knowledge from the Workplace for Nationwide Statistics confirmed on Friday.

This was beneath the 0.4 per cent forecast by economists polled by Reuters, and was a pointy decline from the 0.6 per cent enlargement within the earlier month.

Grant Fitzner, chief economist on the ONS, mentioned that the UK well being sector grew strongly, whereas second-hand automobile gross sales and employment businesses additionally boosted the financial system.

“Taken as a complete, the dominant providers sector reached its pre-pandemic stage for the primary time in twenty months,” he famous. Nonetheless, he added that these good points have been offset by a drop in exercise in eating places, which fell again after a robust summer season, and diminished oil extraction and fuel use.

Development skilled its largest drop since April final 12 months, with notable falls in housebuilding and infrastructure, partly pushed by shortages in uncooked supplies.

Manufacturing output decreased by 0.6 per cent and development fell by 1.8 per cent amid widespread provide chain disruptions and shortages of products and staff.

Companies output grew by 0.4 per cent in October, with essentially the most important contribution coming from well being actions, primarily due to a continued rise in face-to-face appointments at GP surgical procedures in England.

Total, the UK’s output was nonetheless 0.5 per cent beneath in February 2020, earlier than the pandemic.

Alpesh Paleja, CBI Lead Economist, mentioned that “development disenchanted in October, reinforcing considerations concerning the resilience of the UK’s financial restoration to the Omicron variant and the influence of additional restrictions”.

That is the final knowledge on UK GDP earlier than the Financial institution of England’s rate of interest determination subsequent week. Economists anticipate the Financial institution to postpone a fee enhance due to considerations concerning the unfold of the Omicron variant of coronavirus.