UK economic growth compared to WWII levels — Analysis
According to the Office for National Statistics (ONS), the British economy experienced a 7.5% increase in 2021 after a dip of close to 10% the year prior. This was following Covid-19 lockdowns that disrupted the economic activity.
This figure is the highest gross domestic product growth (GDP), since 1941 when Britain was involved in a six year war with Nazi Germany, Fascist Italy and allies.
Even though December saw a contraction of 0.2%, the record growth was achieved because the Omicron version of Covid-19 caused tighter restrictions that kept people at home during Christmas. UK began 2021 under severe stress due to record numbers of hospitalizations, a spike in Covid case number and prolonged lockdown.
As the UK was behind its G7 colleagues, at the end 2021 the UK’s economy was still 0.4% lower than the fourth-quarter 2019. The US GDP has already risen 3.1% from its pre-Covid peak. Italy, Japan and Germany are further behind their 2019 levels.
ONS data also showed that Britain has been trading with more countries around the globe than it did previously. After the implementation of Brexit controls, higher fuel prices and increased imports from non EU countries for twelve consecutive months, there was an increase in trade with producers of hydrocarbons.
“With the ongoing coronavirus pandemic and recession, it is difficult to assess the extent to which these trade movements reflect short-term trade disruption or longer-term supply chain adjustments,”According to the ONS.
Rishi Sunak (Chancellor of the Exchequer) reacted positively to GDP data and praised his government’s support for the UK’s drive to become the fastest growing G7 country.
This positive number comes amid high inflation and real pressure on disposable income. Britons will be under more pressure from the proposed increase in their national insurance contribution.
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