UK economic output slowed to +0.1% in February, down from +0.8% in January. The UK economy is now 1.5% larger than its pre-pandemic level.
The leading contributor to growth over February was the services sector, up 0.2%, boosted by tourism-related industries and consumer-facing services.
These results indicate returning consumer confidence and relaxation of lockdown regulations as the threat from the Omicron variant of COVID-19 subsided.
However, looking ahead, the outbreak of the war in Ukraine is expected to dent this recovery and it is possible that COVID virus threat will return.
Production activities dragged growth down, falling by 0.6%. As part of this, car manufacturing fell by 5.4%, primarily due to global supply chain pressures for semi-conductors (ie: “chips”).
This monthly estimate will be concerning for policy makers, because growth of 0.3% was forecast.
Given the collapse in shopper confidence due to the war in Ukraine and the rising cost of living, an economic contraction over the coming months is becoming a possibility.
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