Britain’s economy grew faster than expected in 2021 even with the impact of omicron in December, the latest official data has revealed.
The economy increased by 7.5% during the year, the fastest rate of growth since the end of the Second World War, even with a 0.2% contraction in December.
Darren Morgan, director of economic statistics at the ONS, said retail and hospitality were the sectors most affected by the restrictions in December, though an increase in the Test and Trace and vaccination programmes helped to offset this.
GDP grew ‘robustly’; across the fourth quarter, he added with services such as employment agencies and couriers standing out.
Paul Dales, chief UK economist at Capital Economics, said the economy should bounce back quickly from the omicron problems, but the squeeze on household incomes from heating costs, inflation generally and higher taxes might be a more long-term problem.
“It's possible that GDP fell in January as that’s when omicron caused the most people to stay off work and self-isolate. But equally, the timely indicators suggest that activity began to recover from the middle of the month.
“Either way, a 2pc fall in real household disposable incomes this year (due to higher inflation and taxes) will restrain GDP growth from April.
“With inflation soaring, we doubt this will prevent the Bank of England from raising interest rates from 0.5% to 1.25% this year and perhaps to 2% next year."
Other economists also predicted more interest rates after these figures.
Martin Beck, chief economic advisor to the EY ITEM Club, said that combined with the hit to household income will slow growth in 2022.
"High-frequency data suggests that social consumption has recovered in recent weeks, as Covid-19 case numbers have gone down.
"But while the downside risks from Omicron have receded, the recovery now faces the more conventional economic challenge of high inflation.
"And with consumers facing the biggest squeeze on spending power in more than a decade, the EY ITEM Club expects GDP growth to be much slower in 2022 than the upwardly revised 7.5% rate recorded in 2021."
Separately, the ONS revealed that the UK traded more with the rest of the world than the European Union for the first time as imports from non-EU countries rose for a twelfth consecutive month.