The UK’ gross domestic product (GDP) is estimated to have increased by 1.3% in the fourth quarter (Q4) of 2021 between October to December, meaning UK GDP is now 0.1% below pre-Covid levels.
Annual GDP in 2021 is now estimated to have increased by a revised 7.4% compared to the previous 7.5%, following a revised 9.3% decline in 2020.
Additionally, the UK’s net borrowing position with the rest of the world reduced to negative 1.3% as a percentage of GDP in Q4 2021, compared with negative 5.1% of GDP in July to September (Q3) in 2021.
Meanwhile, GDP in December 2021 fell by 0.2%, with reports that the Omicron variant impacted certain industries, hitting retailing and hospitality in particular.
Following the 9.3% fall in 2020 following the initial impact of Covid and public health restrictions, there was a rebound in GDP which saw an annual rise of 7.4% in 2021. This was the largest annual increase in GDP since the Second World War, according to the Bank of England.
The largest contributors to the Q4 increase were from human health and social work activities, and a large increase in coronavirus testing and tracing activities, and the extension of the vaccination programme.
Administration and support service activities grew 6.4%, driven by activity from employment agencies, travel agents and office administration.
The 7.7% quarterly increase in transport and storage was driven by increased retail activity during this period, amid “stronger than usual” Black Friday sales and online activity in the build-up to Christmas, leading to higher deliveries of goods.
This was partially offset by falls in accommodation and food services by 3.6%, which was “adversely” impacted by the emergence of Omicron towards the end of the quarter.
Darren Morgan, director of Economic Statistics, said: “Savings were at their lowest level since the start of the pandemic as household spending rose, mainly driven by rising prices.
“The underlying current account deficit halved, as UK-based businesses earned more income from abroad than foreign-based companies earned in the UK for the first time in a decade.”