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PwC comments on ONS October GDP figures

10 Dec 2021

Jonathan Gillham, Chief Economist at PwC UK says,

"Today’s figures suggest that the recovery is on rocky ground. It follows on from September's data which reflected strong growth in the parts of the economy that are either being propped up by government support or experiencing high demand as a result of reopening after the end of lockdown restrictions. 

"This pattern continues in October, albeit to a lesser extent, where much of the economic upside is coming from rising demand in GP appointments and a continued recovery in air travel. Manufacturing sector output is flat, the construction sector experienced it’s largest fall in output since April 2020 (-1.8%) and the parts of the economy driving the UK’s innovation and R&D fell by 7.3%. 

"At this stage in the recovery, growth of 0.1% in October will be concerning to policy makers. If the Omicron variant plays out in line with initial concerns there could be further problems in the months ahead. Nonetheless, there are some signs of business confidence - activities of temporary recruitment agencies grew rapidly (6.7%) reflecting strong labour market performance and households are booking holidays (up 30.4%). 

"There is still considerable optimism about the recovery and this may yet still drive growth in the months ahead. However, this optimism is conditional on inflation and a potential interest rate rise not hitting household spending levels. Rising inflationary expectations, a weak pound and exposure to new COVID variants are seen as the key risks to the economy over the coming months."

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David Bowden

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