The UK economy surpassed its pre-pandemic level for the first time in November after growing by 0.9% over the month, partly driven by an unexpected surge in early Christmas shopping.
The Office for National Statistics (ONS) said a jump in restaurant bookings and a rapid turnaround in construction output were also behind the growth that took the size of the economy 0.7% above its level before March 2020.
City economists had expected an expansion of only 0.4% and said November was likely to prove a high point in 2021, with the figures collected by the ONS coming shortly before the Omicron variant took hold, exacerbating worker shortages as thousands were off sick, and forcing the government to introduce plan B restrictions. It followed growth of 0.2% in October.
The continuing increase in health services as a proportion of economic activity was another factor supporting the rise in GDP, the ONS said.
Against a backdrop of rising inflation and the threat of further interest rates by the Bank of England, business groups warned the economy remained weak.
Suren Thiru, the head of economics at the British Chambers of Commerce, said: “Stronger growth in November is likely to be followed by a modest fall in output in December and January, as consumer caution to socialise and spend, and mounting staff absences sparked by Omicron and plan B limit activity.
“While the UK economy should rebound once plan B measures are lifted, surging inflation and persistent supply chain disruption may mean that the UK’s economic growth prospects remain under pressure for much of 2022.”
Analysts said that while the economy had struggled to grow since the summer, there was the prospect of a return to stronger growth in 2022, albeit with consumer spending constrained by the rising cost of living.
Ana Boata, the head of economic research at the credit insurer Euler Hermes, said the consumer had come to the rescue of an economy still suffering the effects of Covid-19
“We expect GDP growth to hit 4.4% this year, followed by a further 2.6% increase in 2023. It’s not all plain sailing, though. Wages will go up around 3.5% above the pre-crisis average in 2022, in reaction to price rises across the full economy.
“Despite the Bank of England expected to raise rates at least twice this year to keep inflation in check, households’ real purchasing power will suffer, leaving excess savings to prop up consumer spending levels.”
The chancellor, Rishi Sunak, welcomed the news that Britain’s economy was larger than before the pandemic.
“It’s amazing to see the size of the economy back to pre-pandemic levels in November – a testament to the grit and determination of the British people,” he said.
“The government is continuing to support the economy, including through grants, loans and tax reliefs for businesses, and our plan for jobs is ensuring people up and down the country have fantastic opportunities.
“We all have a vital part to play to protect lives and jobs, and I urge everyone to do theirs by getting boosted as soon as you can.”