London, Jan. 30 (BNA): British companies have grown at the slowest pace since April 2021 over the past three months, after demand for services fell head-on due to the Omicron variant of the coronavirus, the Confederation of British Industry said Sunday.
The British economy recovered to its pre-pandemic size in November, before being hit by the highly contagious Omicron which led to government advice to work from home and restrictions on hospitality in Scotland and Wales.
“Consumer services have borne the brunt of ‘Plan B’ restrictions and general prudence Omicron, with activity here contracting sharply,” CBI economist Albes Baleja was quoted as saying by Reuters.
The CBI’s monthly growth index – which is based on quarterly growth rates from previously published surveys of manufacturers, retailers and other service firms – fell to +12 in January from +21 in December.
It was the lowest reading since April, which covered a three-month period when bars, restaurants and non-essential retailers were largely closed due to the previous COVID wave.
COVID-19 cases in Britain have fallen sharply since their peak in early January, and most economists believe production will soon recover.
But there is a headwind for many companies from sharply rising inflation, which hit its highest level in nearly 30 years in December and is expected to exceed 6% in April when regulated home energy bills soar.
“Consumer-facing businesses will also have to contend with increasing pressures on household budgets,” Baleja said.
The Bank of England is expected to raise interest rates on Thursday to 0.5% from 0.25%, the second increase in less than two months.
The CBI survey was based on responses from 477 companies between December 20 and January 17.
HF