IEA - Disappointing GDP data should hasten review of Plan B

From: Think Tanks
Published: Fri Dec 10 2021

Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, commented on the GDP data published today by the ONS

The growth of just 0.1 per cent in the UK economy in October suggests that the recovery was already stalling, even before the scare over the Omicron variant. The latest business and consumer surveys are more encouraging, and activity should have picked up in November. Unfortunately, and perhaps unnecessarily, the economy will now be whacked again by Plan B'.

GDP was undercut in October by falls in energy and mining output, which are relatively volatile, and by weakness in manufacturing and especially in construction, partly due to global supply problems which are now easing. These components should therefore bounce back in November. But output in the services sector was lacklustre too.

The direct effect of the new Covid measures will be compounded by the potentially chilling effect on consumer and business confidence, which could hit spending hard in the coming weeks. The hospitality sector in particular may need more support in the crucial pre-Christmas period, adding to the burden on the taxpayer.

The disappointing GDP data therefore strengthen the case for the government to review the new Plan B' restrictions sooner rather than later, as new evidence emerges on the risks posed by Omicron.

Notes to editors

Contact: Emily Carver, Head of Media, 07715 942 731

IEA spokespeople are available for interview and further comment.

GDP monthly estimate, UK : October 2021

Company: Think Tanks

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