UK economy grows by 1.3% and nears pre-pandemic level

‘GDP grew a little stronger than we first thought,’ Office for National Statistics official says

The UK economy grew at a faster pace than first thought in the final few months of last year, the ONS says (AFP via Getty Images)

The UK economy grew at a rate of 1.3 per cent towards the end of last year, with GDP now just below pre-pandemic levels.

The Office for National Statistics (ONS) said this growth was greater than initially thought.

It had previously estimated GDP grew by 1.0 per cent in the final months of last year.

On Thursday, it said the figure was in fact 1.3 per cent for the fourth quarter of 2021, which runs between October and December.

Darren Morgan, the ONS director of economic statistics, said: “GDP grew a little stronger than we first thought in the fourth quarter, meaning it is now only 0.1 per cent below its pre-pandemic level.”

Revisions to GDP figures for the past two years means the economy increased by 7.4 per cent in 2021. This was still a record rebound but lower than the 7.5 per cent initial estimate.

The ONS said this comes after it revised the record-breaking GDP drop at the height of the pandemic in 2020 to 9.3 per cent, against the 9.4 per cent first estimate.

But the recent economic growth comes amid a cost-of-living crisis, driven in large part by soaring household bills. These are set to rise even further on Friday due to another energy price cap increase.

Last week, the Office for Budget Responsibility even warned the UK is set for the biggest fall in living standards since record began. The official forecaster warned higher inflation would “erode real incomes and consumptions” in a way that would cut GDP growth this year.

On Thursday, the ONS said income grew by 1.3 per cent compared to a 1.9 per cent rise in spending in the fourth quarter of last year.

Mr Morgan, the body’s director of economic statistics, said: “Savings were at their lowest level since the start of the pandemic as household spending rose, mainly driven by rising prices.”