KPMG comments on today’s GDP figures: Jan 2022

“Economy reaches milestone level before heading into a testing winter” says Yael Selfin, Chief Economist at KPMG UK.

“We expect growth to slow in 2022 as it will no longer be able to simply rely on the rebound effect to propel it. In addition, rising taxes and borrowing costs, as well as elevated inflation, will squeeze households’ purchasing power, while the lingering effects of supply chain bottlenecks together with a persistent shortage of labour could constrain production this year.

“Despite the growing threat of Covid, the UK economy was back on track in November led by professional scientific and technical activities as well as transport and storage services. GDP grew by 0.9 percent to reach a level last seen before the pandemic.

“Strong retail sales show the growing importance of November pre-Christmas sales to the holiday season, especially as December was marred by rising infections due to the Omicron variant. Elsewhere, manufacturing activity showed signs of easing supply tensions, while services built on October’s strong momentum.”