The Confederation of British Industry said on Sunday that during the past three months, British businesses expanded at their weakest rate since April 2021. This was because of a sharp drop in the face-to-face services sector due to the pandemic wave caused by the Omicron variant of the novel coronavirus.
Prior to being hit by the Omicron variant, which is much more contagious than the previous variants, the British economy had managed to only rebound to pre-pandemic levels in November. That had prompted the government to advise to work from home and impose limitations on hospitality in Scotland and Wales.
"Consumer services have borne the brunt of 'Plan B' restrictions and general Omicron caution, with activity here shrinking sharply," CBI economist Alpesh Paleja said.
The monthly growth index of the CBI declined to +12 in January from +21 in December last year, which was calculated based on quarterly growth rates from previously published surveys of manufacturers, retailers, and other service businesses.
That reading was the lowest reading since April of last year when a previous Covid-19 wave forced the government to announce closures of pubs, restaurants, and non-essential stores for a period of three months at a stretch.
Since a peak in early January, Covid-19 infections in the United Kingdom have dropped dramatically, and most analysts believe that the economic output of the country will soon recover.
However, many businesses are facing a range of headwinds primarily because of fast-rising inflation, which reached its highest level in nearly 30 years in December and is expected to be more than 6 per cent in April this year when there will potentially be an increase in the regulated residential energy rates.
"Consumer-facing firms will also have to contend with a deepening squeeze on household budgets," Paleja said.
The Bank of England is anticipated to boost interest rates to 0.5 per cent on Thursday, up from 0.25 per cent, marking the second hike in less than two months.
Between December 20 and January 17, 477 businesses responded to the CBI survey.
(Source:www.gulfenws.com)
Prior to being hit by the Omicron variant, which is much more contagious than the previous variants, the British economy had managed to only rebound to pre-pandemic levels in November. That had prompted the government to advise to work from home and impose limitations on hospitality in Scotland and Wales.
"Consumer services have borne the brunt of 'Plan B' restrictions and general Omicron caution, with activity here shrinking sharply," CBI economist Alpesh Paleja said.
The monthly growth index of the CBI declined to +12 in January from +21 in December last year, which was calculated based on quarterly growth rates from previously published surveys of manufacturers, retailers, and other service businesses.
That reading was the lowest reading since April of last year when a previous Covid-19 wave forced the government to announce closures of pubs, restaurants, and non-essential stores for a period of three months at a stretch.
Since a peak in early January, Covid-19 infections in the United Kingdom have dropped dramatically, and most analysts believe that the economic output of the country will soon recover.
However, many businesses are facing a range of headwinds primarily because of fast-rising inflation, which reached its highest level in nearly 30 years in December and is expected to be more than 6 per cent in April this year when there will potentially be an increase in the regulated residential energy rates.
"Consumer-facing firms will also have to contend with a deepening squeeze on household budgets," Paleja said.
The Bank of England is anticipated to boost interest rates to 0.5 per cent on Thursday, up from 0.25 per cent, marking the second hike in less than two months.
Between December 20 and January 17, 477 businesses responded to the CBI survey.
(Source:www.gulfenws.com)
