Revised figures reveal that UK economic growth was slower than initially estimated in July and September.
Omicron was a quarter-end economic report by the Office for National Statistics. It stated that the economy had grown 1.1% rather than 1.3% in this period of Britain being out of lockdown.
This was due to weaker consumer spending as well as the effect of companies leaving energy business.
Now, 1.5% of the economy has been affected by coronavirus.
This data is older than Omicron Covid’s emergence, which could be an additional drag to growth.
Darren Morgan is the director of economic statistics for the ONS. He stated: “Our revised figures indicate that the UK’s GDP (gross Domestic Product) has recovered a bit slower in the 3rd quarter. There were much lower performances by hairdressers and health professionals across the quarter. The energy sector contracted more in September than what we had previously predicted.
With the economy opening in the third-quarter, household savings were lower in this period. But, households still saved at levels comparable to pre-pandemic.
- What does GDP mean for me and what are its implications?
Due to rising wholesale gas prices, more than 20 small-sized energy suppliers went bankrupt in the last few months. This has made it impossible to deliver on price promises that customers had been expecting.
Since the outbreak of the pandemic nearly four million households saw their suppliers fail, with a substantial rise in the bills for approximately 15 million in April.
The revised growth estimates were also due to weakness in the healthcare sector (test and trace work, vaccinations, etc.) and hairdressers.
Morgan stated that stronger data in 2020 means the economy is closer to pre-pandemic levels. According to new estimates, the slump in Britain’s economy for last year was 9.4% rather than 9.7%.
In the three-months to September, business investment fell 2.5% and was almost 12% lower than its pre-pandemic peak.
However, investors should be prepared for a slower GDP growth in the fourth quarter 2021 as well as a weaker start to 2022. This is due to Covid, which has harmed the hospitality industry in Britain and hit the retailers.
Capital Economics economist Bethany Beckett said that although the economy has been able to cope with the coronavirus restrictions better, “possibility” of tighter January restrictions is further affecting the GDP outlook.
In inflation-adjusted terms, the ONS stated that Britain’s return to pre-pandemic conditions was still behind other rich nations such as France and Germany.
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