UK economy grew in January as Omicron eased

UK financial progress bounced again in January as the results of the Omicron coronavirus variant started to ease, official figures present.

The economic system grew by 0.8% in contrast with a 0.2% fall in December the Workplace for Nationwide Statistics mentioned.

However regardless of the rebound in January, economists warned that the UK may very well be dealing with recession as a consequence of financial shocks together with Russia’s invasion of Ukraine.

Chancellor Rishi Sunak mentioned it was creating financial uncertainty.

Wholesaling, retailing, eating places and takeaways all carried out properly, in line with the official figures.

Whereas provide chain points continued to canine some sectors, development and manufacturing each grew, the ONS added.

Pc programming and movie and TV manufacturing additionally had a very good begin to the 12 months, mentioned Darren Morgan, ONS director of financial statistics.

“GDP bounced again from the hit it took in December as a result of Omicron wave and is now 0.8% above its pre-pandemic peak,” he mentioned.

“All sectors grew in January with some industries that have been hit notably onerous in December now performing properly.”

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Regardless of the rebound, chancellor Rishi Sunak was cautious on the prospects for the UK economic system.

UK households have been already dealing with sharply rising prices earlier than Russia’s invasion of Ukraine, partly as a consequence of hovering power prices.

Mr Sunak mentioned that Russia’s invasion “is creating important financial uncertainty”, however “it’s vital that we stand with the individuals of Ukraine to uphold our shared values of freedom and democracy and guarantee Putin fails”.

He added that the federal government had “supplied unprecedented assist” all through the Covid pandemic, “which has put our economic system in a robust place to cope with present price of residing challenges”.

Recession warning

Regardless of the stronger-than-expected progress in January, the British Chambers of Commerce (BCC) warned there was a danger that the UK may very well be heading for a recession.

Suren Thiru, the BCC’s head of economics, mentioned: “Whereas there was a robust rebound in output in January because the impression of Omicron began to ease, the figures have been pushed into the rear-view mirror by renewed home and international shocks, together with Russia’s invasion of Ukraine.

“The UK’s economic system may stall within the close to time period as rising inflation, hovering power payments and better taxes more and more drag on exercise, regardless of a possible increase to output in February from the top of Plan B Covid restrictions.”

He mentioned the invasion of Ukraine had pushed up the danger of a UK recession as a result of it was making the price of residing disaster worse, and “derailing the provision of essential commodities to many sectors of the economic system”.

Kitty Ussher, chief economist on the Institute of Administrators, mentioned that the important thing query dealing with the UK economic system was whether or not individuals who have sufficient money to have the ability to select easy methods to spend a few of it might be “extra happy in regards to the retreat of the virus than they’re involved in regards to the monetary impression of the grim information from Ukraine”.