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PwC comments on ONS December GDP figures

11 Feb 2022

Barret Kupelian, senior economist at PwC UK, says

“Today’s data shows UK economic activity contracted in December last year but grew overall in the fourth quarter of 2021, consistent with expectations. This meant that the UK was the fastest growing economy in the G7— displaying the strongest growth for more than 70 years after being the worst performer in the same group the year before. However, the UK’s position is less flattering when you compare its level of output to its G7 peers,  with the US and France having grown more over the same period (see chart).

Source: PwC analysis, Refinitiv, national statistics agencies

For Canada and Japan we used the Q4 2021 OECD forecasts

Looking at output by sector the story is mixed. Services continued to roar ahead, with output almost 4% higher than pre-pandemic levels. Services growth was mainly driven by increased activity in the health, transport and logistics and professional and scientific sectors. This is impressive when set against the context of tight labour market conditions.

The impact of supply chain troubles was clearly on display for the manufacturing sector. Manufacturing output was broadly flat in the fourth quarter of last year and the production sector as a whole is still around 4% smaller than its pre-Covid levels.

“It is clear that the UK and other advanced economies have now turned a page and are in a post-pandemic era. We therefore expect the attention of businesses to shift from trying to keep up with changing epidemiological conditions to maintaining their profit margins in the face of high inflation and broader input price increases. At the same time they will be making plans to invest for future growth, particularly in green and digital technologies.”

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David Bowden

David Bowden

Manager, Corporate Affairs, PwC United Kingdom

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