Commenting on this morning’s UK GDP data, Melanie Baker, Senior Economist at Royal London Asset Management said:
“Easing of supply chain pressures and a strong Black Friday look to have been among factors helping boost growth in November.
“December GDP growth looks set to be quite a bit weaker. Omicron has likely left a dent in activity and there have been signs – including in today’s report – that some activity was brought forward from year end.
“December’s Omicron outbreak and social distancing measures likely mean GDP growth at least slowed in December and business surveys signal some reduction in activity growth at the end of 2021. That isn’t the only challenge to activity growth that the UK faces as 2022 gets underway. The fiscal policy stance is tightening, monetary policy is tightening. Real pay growth is weak, with high inflation eating into household financial resources.
“However, an outperforming vaccination programme and high household and corporate aggregate cash levels should help the economy see reasonable growth rates overall. Prospects for business investment to drive further recovery still look good once uncertainty recedes.”
The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.