London-The Confederation of British Industry said on Sunday that it has grown at the slowest pace since April 2021 in the last three months after the demand for face-to-face services fell due to the Omicron variant of the coronavirus.
After the UK economy recovered to pre-pandemic scale in November, it was hit by a highly infectious variant of Omicron, leading to government advice on telecommuting and hospitality restrictions in Scotland and Wales.
“Consumer services have been struck by the limitations of’Plan B’and the general attention of Omicron, and activity here is shrinking sharply,” said Alpesh Paleha, CBI economist. Stated.
CBI’s Monthly Growth Index is based on quarterly growth from a previously published survey of manufacturers, retailers, and other services businesses, dropping from +21 in December to +12 in January. Did.
This was the lowest measurement since April covering a three-month period when pubs, restaurants, and non-essential retailers were largely closed due to the previous wave of COVID-19.
Cases of COVID-19 in the UK have declined sharply since their peak in early January, and most economists believe that production will soon recover.
However, there are headwinds for many companies and inflation is skyrocketing. Inflation is projected to reach its highest level in nearly 30 years in December and exceed 6% in April, when regulated household energy prices rise.
“Consumer businesses will also have to deal with the growing pressure on households,” Paleha said.
The Bank of England is expected to raise interest rates on Thursday from 0.25% to 0.5%, the second rate hike in less than two months.
The CBI survey is based on responses from 477 companies from December 20th to January 17th.