UK economic growth slower than first thought before Omicron hit

Weaker performances from hairdressers were partly behind the revised growth estimate

The UK economy grew at a slower pace than first estimated between July and September, revised figures show.

The Office for National Statistics (ONS) said during the quarter before Omicron took hold, the economy grew by 1.1%, rather than 1.3%, as Britain emerged from lockdown.

It blamed weaker consumer spending, and the impact of energy companies going out of business.

The economy is now 1.5% smaller than it was before the coronavirus pandemic.

The data pre-dates the emergence of the Omicron variant of Covid, which is expected to be a further drag on growth.

Darren Morgan, director of economic statistics at the ONS, said: "Our revised figures show UK GDP (gross domestic product) recovered a little slower in the third quarter, with much weaker performances from health and hairdressers across the quarter, and the energy sector contracting more in September than we previously estimated.

"With the economy reopening in the third quarter, households saved less in the latest period. However, household saving was still up on pre-pandemic levels."

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More than 20, mostly small energy suppliers have gone bust in recent months due to increased wholesale gas prices making price promises to customers undeliverable.

Nearly four million other households have seen their supplier fail since the start of the pandemic, and a significant rise in bills is on the cards for about 15 million people in April.

Weakness in the health sector, where test and trace work and vaccinations tailed off, and among hairdressers were also behind the revised growth estimate.

However, Mr Morgan said stronger data for 2020 meant the economy was closer to pre-pandemic levels than first estimated. The slump in Britain's economy last year has now been estimated to be 9.4%, rather than 9.7%.

Business investment also fell by 2.5% in the three months to September and was nearly 12% below its pre-pandemic level.

But investors are braced for a further slowdown of GDP in the fourth quarter of 2021, and a weak start to 2022, due to the rise in Covid cases which has hurt Britain's hospitality sector and hit retailers.

Bethany Beckett, economist at Capital Economics, said although the economy had got better at coping with coronavirus restrictions, the "possibility of tighter restrictions in January is further darkening the outlook for GDP".

The ONS said Britain's recovery to its pre-pandemic economy remained behind most other big rich economies such as France, Germany and the US, in inflation-adjusted terms.