UK economy grew more quickly than thought in late 2021

Britain’s economy grew more quickly than previously thought in the last three months of 2021 when the country was hit by the Omicron wave of Covid-19 cases, driven by higher health spending, official data showed on Thursday.

Gross domestic product in the world’s fifth-biggest economy increased by 1.3 per cent in the fourth quarter from the previous three-month period, the Office for National Statistics said, stronger than a preliminary estimate of growth of 1.0 per cent.

The ONS said the largest contributors to the increase came from human health and social work activities, driven by increased visits to doctors at the start of the quarter, as well as a large increase in coronavirus testing and tracing and the extension of the vaccination programme

That represented an acceleration from the economy’s 0.9 per cent growth in the third quarter but was well below its 5.6 per cent expansion in the April-June period of last year when it was rebounding from COVID-19 lockdowns.

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Investors expect the recovery to slow in 2022 as inflation heads for almost 9 per cent and households face the biggest fall in living standards since at least the 1950s, according to forecasts by the government’s fiscal watchdog.

Households dipped into their lockdown savings to finance their spending. The saving ratio fell to 6.8 per cent of disposable income from 7.5 per cent in third second quarter, approaching its level of 6.0 per cent immediately before the pandemic, the ONS said.

The level of GDP at the end of 2021 was 0.1 per cent below where it was at the end of 2019, revised from a previous estimate of 0.4 per cent below its pre-pandemic level. – Reuters