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January 2022

The UK economy grew above its pre-pandemic size for the first time in November 2021.

In December, however, Omicron became the dominant variant of the coronavirus in the UK. The more transmissible variant is likely to have slowed the economic recovery during December and January, as people became more cautious and some public health restrictions were re-introduced.

Inflation reached a 30-year high in December, heightening concerns about the rising cost of living.

Headline Indicators summary

GDP grew by 0.9% in August-October 2021 compared to the previous three-month period (May-July). This compares to growth of 2.2% in the Eurozone in Q3 2021.

Services output was up by 5.9% in the three months to October 2021 compared to the previous year. Manufacturing output rose by 2.7%.

CPI inflation was 5.1% in November 2021, up from 4.2% in October. Inflation in the Eurozone was 4.9% in November, up from 4.4% in October.

The Bank of England’s Monetary Policy Committee (MPC) raised interest rates to 0.25% on 16 December, up from 0.1%, where they had been since 19 March 2020.

Average wages excluding bonuses were 4.3% higher in the three months to October 2021 compared with the year before. CPI inflation for this period was 3.5%.

32.51 million people were in employment in August-October 2021, up 193,000 from a year before. The employment rate was 75.5%, up from 74.9% the previous year.

1.42 million people were unemployed in August-October 2021, a fall of 295,000 from the year before. The unemployment rate was 4.2%. The UK harmonised unemployment rate for Q3 2021 was 4.3%, above the rate of Germany (3.4%) but below that of the US (5.1%) and France (7.9%).

Productivity across the whole UK economy fell by 1.2% in Q3 2021 compared with the previous quarter. Compared with the previous year, it was down by 4.8%.

Government borrowing in April-November 2021 was £136 billion, £116 billion less than the equivalent period in 2020/21. At the end of November 2021, public sector net debt was equivalent to 96.1% of GDP, compared with 81.0% before the pandemic in November 2019.

The UK had a trade deficit of £5.2 billion in the three months to October 2021, compared with a £0.7 billion deficit in the previous three months. The current account deficit was £24.4 billion in Q3 2021 (4.2% of GDP), up from £13.5 billion in Q2 2021 (2.3% of GDP).

The value of sterling fell by 0.6% between October and November, following an increase of 0.6% between September and October. Compared with a year ago, it is 4.3% higher.

The volume of retail sales decreased by 0.6% in the three months to November 2021 compared with the previous three months, and increased by 0.5% compared with the previous year.

GfK’s Consumer Confidence Index, which measures consumer attitudes, was at -15 in December 2021, down from -14 in November.

House prices increased by 10.1% in the year to October 2021.

Household debt stood at 132.2% of disposable income in Q3 2021. It has been around this level since mid-2017.

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