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LONDON: Britain’s economy shrank less than expected in December when the surge in omicron COVID-19 cases prompted many to work from home and avoid socializing over Christmas, but analysts have warned that the surge in inflation would slow the recovery in 2022, according to Reuters.

Gross domestic product in December fell 0.2% from November and was 6.0% higher than a year earlier, the Office for National Statistics said.

Economists polled by Reuters had forecast a monthly decline of 0.6% for the world’s fifth-largest economy and output 6.3% higher than a year earlier.

The economy grew 1.0% for the entire fourth quarter, the same rate as the previous quarter.

“Despite the setback in December, GDP grew robustly in the fourth quarter as a whole, with the NHS (National Health Service), couriers and employment agencies all helping to support the economy,” he said. said ONS economist Darren Morgan.

GDP in December was in line with its February 2020 level, just before the pandemic hit, while output in the fourth quarter as a whole was slightly lower than in the fourth quarter of 2019, the last full quarter before the pandemic.

November’s monthly GDP growth rate was revised down to 0.7% from a previous estimate of 0.9%.

COVID-19 infections in Britain peaked at the start of the year but have since fallen sharply, and the Bank of England last week forecast output, measured on a quarterly basis, would return to its pre- -pandemic by the end of March.

The Bank of England sees greater headwinds due to rapidly rising inflation, which is expected to peak at a 30-year high of around 7.25% in April, when a 54% increase in tariffs home energy regulations will come into effect.

“The UK economy faces a significantly weaker 2022 as the crippling burden of rising inflation, soaring energy bills and rising consumer and business taxes dampen activity, despite a temporary boost.

of the lifting of Plan B restrictions,” said Suren Thiru, head of economics at the UK Chambers of Commerce.

The central bank has raised interest rates twice since December – the first consecutive rate increase since 2004 – and financial markets are forecasting rates of 1.75% by the end of this year.

Economic output in 2021 as a whole rose by 7.5%, the strongest since the ONS began its records in 1948 and the fastest since 1941, during the Second World War, using data collected by the Bank of England.
Production fell 9.4% in 2020, the biggest drop since 1919, the year of demobilization after the First World War.

—Reuters

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