ONS: UK fastest growing G7 member in 2021, but ‘middle of the pack’ for pandemic recovery
The UK recorded the fastest growth in the G7 last year, as the economy rebounded from the 2020 slump.
The 7.5% increase in GDP during 2021 is the fastest growth seen among the G7 countries.
It beats the US (5.7% growth), France (+7%), Germany (+2.7%), and Italy (+6.5%) as well as the EU (+5.2%), and likely to beat Canada and Japan who have yet to release 2021 GDP data.
But, the UK is recovering from a lower base, having contracted 9.4% in 2020. That was a steeper downturn than other G7 members (although Spain, not in the G7, shrank over 10%).
As this chart shows:
Overall, the UK is in the ‘middle of the pack’ in the race to recover from the pandemic, says Darren Morgan, ONS director of economic statistics.
Morgan told Radio 4’s Today Programme that:
If you look at how the UK economy grew in 2021, compared with 2020, then yes, the 7.5% we published this morning means the UK is the fastest growing economy in the G7.
But it’s important to put that into a little bit of context, Morgan added:
The growth in 2021 comes from a low base in 2020 when the UK economy fell sharply.
If you look at where the UK economy is now, compared to its pre-pandemic level, which I know a lot of people do for a broader picture of the economy, the UK is middle of the pack compared with the G7.
With the US, Canadian and French economies above the UK’s, but the UK is above Italy, Germany and Japan.
The United States, France and Canada are all above their pre-coronavirus level of GDP on a quarterly basis, while the UK was still 0.4% below its level of Q4 2019 in Q4 2021 (but level with February’s GDP level in December).
Updated
NIESR, the economic research institute, have predicted the UK economy will grow by 1% in the current quarter.
That would match the expansion in both July-September and October-December, but much slower than the rebound in activity last spring when the winter lockdowns were lifted.
NIESR say the economic impact of Omicron was far smaller than that of either of the two previous major waves of Covid-19, keeping December’s contraction to just 0.2%
Rory Macqueen, Principal Economist at NIESR, says the economy could have returned to growth in January (we’ll find out next month).
The economic impact of Omicron was far smaller than that of either of the two previous major waves of Covid-19: a mere 0.2% fall in December was even stronger than consensus forecasts, but in line with NIESR’s January GDP tracker, suggesting the possibility of a positive reading in January.
Unsurprisingly, retail and hospitality contributed the most to December’s fall, with the healthcare sector providing the largest positive contribution.”
National Institute of Economic and Social Research (@NIESRorg)
⚠️ OUT NOW: our latest #NIESRGDP Tracker suggests that, despite the #Omicron effect on GDP was small, the UK economy is still only expected to grow by 1% in the first quarter of 2022.
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Full story: UK economy grew by fastest rate since second world war in 2021
Phillip Inman
Britain’s economy grew by 7.5% last year in the fastest annual growth rate since the second world war, despite falling back in December as the Omicron variant dented consumer spending.
It comes after the UK suffered one of the largest annual economic contractions of any major economy when GDP fell by 9.4% in 2020 amid the fallout from the first wave of the pandemic.
The Office for National Statistics said output fell by 0.2% in December – a stronger performance than expected – as shortages of goods in the shops in the run-up to Christmas and a record number of job vacancies also slowed the economy after a 0.7% increase in November.
