Brits’ resilience and ability to rapidly adapt in the face of soaring Covid-19 infections will insulate the UK economy from the Omicron variant, according to City economists.
Experience of previous periods of curbs on daily life implemented by the UK government to tamp down on transmissions has resulted in businesses and consumers being able to shrug off any disruption.
“Businesses and households have continued to show more resilience to restrictions in successive waves – as highlighted in the latest sentiment data, suggesting a more limited hit to GDP,” Sanjay Raja, senior economist at Deutsche Bank, said.
The bullish assessment will feed into hopes December and January’s GDP prints will largely be a blip in Britain’s economic recovery.
Most City experts expect a contraction of 0.6 per cent and 0.3 per cent for each respective month, but are pencilling in output to return to growth in February.
This Friday’s GDP estimates from the Office for National Statistics are likely to illustrate Britain’s economy was on the path to return to pre-pandemic size by the first quarter of this year before plan B measures and the Omicron variant whacked consumer spending and confidence.
The consensus forecast is that the economy expanded 0.4 per cent in November.
Consumer spending has remained strong despite tighter restrictions on daily life, including guidance to work from home and slash socialising in the run up to Christmas.
Spending was 12.2 per cent higher in December compared to the same month two years years ago, before the pandemic struck.
Meanwhile, research carried out by the British Retail Consortium found retail sales were 4.6 per cent higher compared to December 2019.
A spate of retailers today reported a bumper crop of results over the festive period, highlighting demand remained strong in the economy.
Simon Roberts, boss of the UK’s second largest supermarket, Sainsbury’s, said the firm had registered its “biggest ever New Year” driven by consumers diverting money that would have been spent on socialising on luxury food.
Fashion retail JD Sports also hiked its profit guidance today after reaped the rewards of a strong festive trading period.