Survey finds that the growth rate of economic activity in the UK has dropped to a 10-month low
An important survey on Thursday showed that the growth of economic activity in the UK has slowed to its lowest level since February as the spread of the Omicron coronavirus variant has hit consumer demand for travel and hotels.
The UK Composite Output Index released by IHS Markit and the Chartered Institute of Purchasing and Supply fell from 57.6 in November to 53.2 in December, which was dragged down by a sharp drop in service industry activity as a result of new virus restrictions hitting consumer confidence.
Business confidence in the economic outlook has also declined for the fourth consecutive month, and expectations for growth in the next year are currently at their lowest level since October 2020-weaker than the depth of the lockdown period in the first quarter, when vaccination efforts were underway .
Chris Williamson, an economist at IHS Markit, said there is a glimmer of good news from the manufacturing industry and the supply chain blockade has eased. However, he added that by 2022, the growth rate will slow down, and to what extent an increase in the infection rate may exacerbate labor and supply shortages, thereby re-igniting inflationary pressures, there is “greater uncertainty”.
Gabriella Dickens of Pantheon Macroeconomics, a consulting firm, said these figures are “the most obvious sign so far that Omicron’s variants are hindering economic recovery.”
At the same time, real-time data shows that the prospects of industries most directly affected by the surge in infections and new restrictions are rapidly deteriorating.
According to data from the online booking site OpenTable, as of the week of December 14, the number of people seated in British restaurants has hardly changed compared to two years ago-this is the weakest performance since the hotel industry reopened in May- There are only 15 people per person. The week before the news of the Omicron variant appeared 100 cents higher than the 2019 level in the week in late November.
Some companies that suddenly stopped bookings may not be prepared to respond: A survey by the National Bureau of Statistics showed that in the week ending December 12, 13% of all companies had no cash reserves. This is from June 2020. The highest percentage ever reported, in the areas of accommodation and catering services, this percentage has risen to nearly one-fifth.
There are also signs that consumer spending is beginning to weaken in the riskiest industries.
According to data from Fable Data, a company that tracks banking transactions, aviation expenditures fell by 39% in the week ending December 12 compared to the same period in 2019, after falling by 20% last month. There has also been a similar decline in broader spending on international travel and tourism, although spending on eating out, public transportation, and fuel has not yet undergone any major changes, even though home coaching has resumed.
Paul Dale of the consulting firm Capital Investment Macros said that until the end of last week, he had been predicting that the GDP in December would not fall by more than 0.1% due to Omicron-but the rapid change in the situation now led to the possibility of a drop of 0.5% to 1%. sex.
He added that if the United Kingdom enters a lockdown in the new year, GDP may fall by at least 3%-if the government fails to strengthen financial support, there may be a more severe and longer-lasting decline.