Figures from the Office for National Statistics have indicated that the UK economy grew by a meagre 0.1 per cent throughout October, and is 0.5 per cent below pre-pandemic levels.
Economists had expected growth of 0.4 per cent over the month, with the economy having enjoyed 0.6 per cent growth in September.
In response, chancellor Rishi Sunak said that the government had “always acknowledged there could be bumps on our road to recovery”.
A drop-off in consumers eating out in hospitality settings and reductions in oil extraction and gas usage offset strong performances in the health sector and sales of second-hand cars.
Meanwhile, the services sector returned to pre-Covid levels, thanks to higher numbers of in-person GP appointments, more people returning to theatres and cinemas, and an increase in staff being recruited into cleaning, construction and security roles.
According to Fidelity International’s investment director, Maike Currie, “supply chain issues, worker shortages and surging inflation” were to blame for growth hitting the buffers, with the news of the Omicron variant of Covid and new restrictions likely to impact future figures.
Currie said: “Workers are heading back to their kitchen tables and the big festive season that retailers and the hospitality sector had their hopes pinned on - while starting on a high during Black Friday - might not have as much sparkle as hoped.”
The ONS chief economist, Grant Fitzner, pointed out that shortages in raw material supply had contributed to the biggest construction sector drop-off since April last year, with “notable falls” coming in housebuilding and infrastructure work.
HSBC’s Liz Martins, a UK economist, said that the economy was “stuttering a little bit” and that public sector services were proving to be the main growth drivers.
Martins said: “It's public sector services, like those GP appointments, that's driving growth. So, a little bit of private sector weakness here, no growth in manufacturing, and a fall in construction.
“The recovery is on pause in December at least, and hopefully we'll be able to restart in the New Year.”
The chancellor was also optimistic for the future, given that the economy was still recovering faster than expected.
Sunak said: “We have still been recovering quicker than expected, with more employees on payrolls than ever before and redundancies remaining low.”
Photo by Viktor Forgacs on Unsplash
