Britain’s economy surpassed pre-pandemic levels for the first time in November after growing by a stronger-than-expected 0.9 per cent.
The uplift from October meant the world’s fifth-biggest economy was 0.7 per cent larger than in February 2020 before the first lockdown was imposed in the UK, according to the Office for National Statistics.
Chancellor of the Exchequer Rishi Sunak said it was amazing to see the size of the economy back to pre-pandemic levels, calling it “a testament to the grit and determination of the British people”.
“The government is continuing to support the economy, including through grants, loans and tax reliefs for businesses, and our Plan for Jobs is ensuring people up and down the country have fantastic opportunities," Mr Sunak added.
Britain’s economy was the hardest hit in Europe at the start of the pandemic, plummeting almost 10 per cent in 2020, after the country ground to halt at the start of the crisis amid escalating cases and deaths.
However, the UK is expected to stage the strongest recovery in the G7 in 2021, with November’s acceleration in growth led by a 3.5 per cent leap in construction output, as raw materials became easier to source and the milder weather improved working conditions.
There was also a 1.1 per cent monthly increase in manufacturing output, with car output up 7.8 per cent and a 2.5 per cent gain in professional and scientific activities with architects, retailers, couriers and accountants also having a bumper month in November.
However, despite November's positive gains, gross domestic product is expected to take a hit in December when the Omicron coronavirus variant swept across Europe, with the loss of momentum stretching into January as many firms report severe staff absences and consumers are still wary of going out.
"More recent data from the ONS indicates the new variant has been causing waves of turbulence for the services industry in particular. Employee absence rates rose sharply at the end of December, with 3 per cent of the workforce estimated to be on sick leave or not working because of Covid symptoms or quarantine, the highest figures since comparable estimates began in 2020 June," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
However, health officials think the Omicron infections wave has now peaked in Britain and analysts say the hit to the economy is likely to be short-lived, allowing the Bank of England to continue raising interest rates this year - something analysts expect to happen as early as next month to quell inflation, which is expected to surpass 6 per cent this year.
“Although the effects of the Omicron Covid-19 wave will probably mean that the economy falls back below its pre-pandemic peak by January after having surpassed it for the first time in November, that will probably prove to be a temporary setback,” said Paul Dales, chief UK economist at Capital Economics.
“That said, a sharp rise in taxes and utility prices on April 1 will be a drag on the recovery for the rest of this year.”
British households face a cost-of-living catastrophe this year caused by rising taxes, soaring energy bills and high inflation, putting the economy under strain, even if Plan B coronavirus restrictions are eased.
“Surging inflation and persistent supply-chain disruption may mean that the UK’s economic growth prospects remain under pressure for much of 2022,” said Suren Thiru, head of economics at the business lobby group the British Chambers of Commerce.
Separate figures showed imports of goods excluding precious metals rose by almost 5 per cent in November, while exports fell 1 per cent.
Imports from countries outside the European Union were higher than those from EU countries for the 11th consecutive month, with the gap now at the widest point of the year. Imports of fuel account for most of the difference.