UK economy bounced back in January 2022 as it grew 0.8 per cent

The UK economy grew by just under one per cent in January this year as it bounced back from a Covid contraction in December.  

Gross domestic product fell by 0.2 per cent in December 2021 as the Omicron variant and Plan B restrictions had a significant impact. 

But that shrinking has now been reversed, with GDP increasing by 0.8 per cent in the first month of 2022. 

It means GDP is now 0.8 per cent above pre-coronavirus levels recorded in February 2020.     

Chancellor Rishi Sunak said the Government’s Covid support package had put the economy in a ‘strong position to deal with current cost of living challenges’. 

But he warned Russia’s invasion of Ukraine ‘is creating significant economic uncertainty’.  

Labour said the positive data would provide ‘little comfort as households look ahead to a year of surging inflation, weak earnings growth and tax rises’. 

Chancellor Rishi Sunak said the Government’s Covid support package had put the economy in a ‘strong position to deal with current cost of living challenges’

Data published this morning by the Office for National Statistics showed GDP grew by 0.8 per cent in January.  

Experts had predicted a 0.1 per cent rise in GDP in January, according to a consensus supplied by Pantheon Macroeconomics.

The ONS data showed all sectors of the economy had grown at the start of the year, with services up 0.8 per cent, production up 0.7 per cent and construction up 1.1 per cent. 

Consumer-facing services grew by 1.7 per cent in just one month, with the ONS saying this was ‘mainly driven by a 6.8 per cent increase in food and beverage activities’. 

The services sector of the economy is now 1.3 per cent above its pre-coronavirus level but consumer-facing services are 6.8 per cent below their pre-pandemic level. 

The Government lifted its Plan B coronavirus measures – including the use of Covid passes and advice to work from home – on January 27.  

ONS director of economic statistics Darren Morgan said: ‘GDP bounced back from the hit it took in December due to the Omicron wave and is now 0.8 per cent above its pre-pandemic peak.

‘All sectors grew in January with some industries that were hit particularly hard in December now performing well, including wholesaling, retailing, restaurants and takeaways. Computer programming and film and television production also had a good start to the year.

‘While supply chain issues persisted in certain sectors, output in both construction and manufacturing grew for the third month running.’  

Mr Sunak said: ‘We have provided unprecedented support throughout the pandemic, which has put our economy in a strong position to deal with current cost of living challenges. 

‘We are continuing to help people where we can, including through over £20 billion of support this financial year and next.

The ONS data showed all sectors of the economy had grown at the start of the year, with services up 0.8 per cent, production up 0.7 per cent and construction up 1.1 per cent

‘We know that Russia’s invasion of Ukraine is creating significant economic uncertainty and we will continue to monitor its impact on the UK, but it is vital that we stand with the people of Ukraine to uphold our shared values of freedom and democracy and ensure Putin fails.’

But Labour’s Pat McFadden, shadow chief secretary to the Treasury, said: ‘This morning’s data provides little comfort as households look ahead to a year of surging inflation, weak earnings growth and tax rises.

‘The Tories have let the cost of living crisis spiral since September – and now they’re going to make it worse by hitting working people and businesses with a tax hike at the worst possible time.

‘The Conservatives should halt their National Insurance hike in April – and they must look again at Labour’s proposal for a one-off windfall tax on oil and gas producers to cut household energy bills by up to £600.’