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GDP still below pre-pandemic level, EY reports

EY expects some ‘modest’ impact on activity in the near-term due to the discovery of the Omicron variant and its likely impact on confidence

GDP rose by 0.1% in October, after a 0.6% month-on-month increase in September, leaving output 0.5% below its pre-pandemic leve, according to EYl.

The firm said GDP growth remained reliant on the health sector. Elsewhere, sectoral performance remained “very patchy”.

However, it revealed that the economy is “edging closer” to its pre-pandemic level in October.

EY expects some “modest” impact on activity in the near-term due to the discovery of the Omicron variant and its likely impact on confidence. Until the health implications are better understood, the firm said it will be “hard” to get a handle on the likely economic impact.

Martin Beck, chief economic advisor to the EY ITEM Club, said: “As in September, the health sector was largely responsible for the rise in GDP, with another rise in the number of face-to-face GP appointments more than offsetting the drag from lower Covid-19 testing. Elsewhere, sectoral performance was patchier.”

He added: “The discovery of the Omicron variant means that the near-term outlook is uncertain. The Government’s move to ‘Plan B’ is unlikely to have much direct impact on activity, given that the new restrictions are relatively minor.

“In the near-term this is likely to mean growth is weaker than forecast a few weeks ago. Until virologists have a better handle on the new variant, and whether additional restrictions will need to be imposed, it’s hard to gauge the likely impact further out.”

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