UK economy suffers small Omicron hit before inflation challenge

UK economy suffers small Omicron hit before inflation challenge

LONDON- Britain suffered a smaller economic hit than feared in December as COVID-19 cases mounted, capping a historic two-year collapse and rebound for the world's fifth-biggest economy, but surging inflation is set to slow the recovery in 2022.

Gross domestic product (GDP) fell 0.2% in December - as many people worked from home and avoided Christmas socialising due to the Omicron coronavirus variant - following growth of 0.7% the month before, official data showed.

Economists polled by Reuters had forecast a 0.6% monthly fall.

The quarterly pace of expansion held steady at 1.0%, helped by the public health service, couriers and employment agencies.

December GDP matched its level in February 2020, just before the pandemic struck. Output in the fourth quarter was slightly below that in the final three months of 2019.

The economy grew 7.5% in 2021 - the biggest annual rise since 1941, when Britain was rearming during World War Two - after a 9.4% collapse in 2020, the largest since the aftermath of World War One.

The slump and rebound are the biggest among the Group of Seven rich nations, in part reflecting Britain's high number of COVID-19 deaths and reliance on consumer-facing services but also different conventions for measuring public-sector output.

COVID-19 infections