The economy has grown slightly faster than expected, bringing it painfully close to pre-pandemic levels, but Britons are saving less as the cost of living crisis takes its toll
Great Britain economy increased by 1.3% in the last three months of 2021, the latest figures reveal.
The United Kingdom gross domestic product (GDP) is now 0.1% where it was at the start of the covid pandemicthe Office for National Statistics (ONS) said today.
GDP is the value of all goods and services in the UK if you put them together and give them a number in pounds.
The forecast was 1% in the fourth quarter, so the economy grew slightly faster than expected.
The main reasons for the economic growth in the fourth quarter of last year were increased visits to doctors, a sharp increase in Covid testing and tracing activities and the vaccination program.
The other main reasons for the growth were the increase in visits to travel agencies and employment agencies in the last three months of 2021.
But Britons also saved slightly less money in the last quarter of 2021 due to the cost of living crisis.
ONS Director of Economic Statistics Darren Morgan said: “Savings were at their lowest level since the start of the pandemic as household spending increased, mainly due to rising prices.”
The ONS said the average UK household saved 6.8% of their income in the fourth quarter of last year, compared with 7.5% from May to July.
This means that for every £100 earned, the average household saved £6.80 in the last three months of 2021, compared to £7.50 in the previous three months.
However, in December alone, GDP fell 0.2% despite the Christmas shopping rush, due to the Omicron strain of Covid hitting businesses.
Retail and hospitality have been particularly hard hit, the ONS said, but sectors such as transport have grown due to an increase in online shopping.
GDP for the whole of 2021 was 7.4%, against 7.5% expected.
But that follows a 9.3% drop in 2020, due to the effects of Covid.
The economies of countries like France, the United States and Canada are now above their pre-Covid levels.
The UK economy grew faster than those of France, Germany, Spain, Italy and Japan in the year to the fourth quarter of 2021.
However, taking inflation into account, UK GDP actually fell by 0.1% over the period, although this was still better than Germany, Spain, Italy and Japan.
UK inflation hit 6.2% earlier this monththe highest level for 30 years.
Inflation is the rate at which prices increase. If a bottle of milk costs £1 and that goes up by 5 pence, then milk inflation is 5%.
Since last December, prices have risen at their fastest pace since the 1990s. Inflation is expected to pick up from midnight April 1, when the cap on energy prices is lifted.
This ceiling is set by the regulator Ofgem and limits the annual amount of an average house on a default tariff.