UK development slowed greater than anticipated in February amid a stoop in automotive manufacturing, regardless of a pointy restoration in abroad vacation bookings after the easing of Covid restrictions.
The Office for National Statistics mentioned gross home product rose by solely 0.1% in February, down from a month-to-month development fee of 0.8% in January when the financial system was recovering from the coronavirus Omicron variant.
City economists had forecast a month-to-month development fee of 0.3%. Overall, the financial system was 1.5% larger than its pre-pandemic degree in February.
Raising questions over the energy of the financial system earlier than Russia’s invasion of Ukraine in late February, manufacturing slumped as automotive producers continued to wrestle with sourcing elements amid international provide chain disruption and shortages of important elements.
Activity within the sector fell 0.4% on the month, pushed by a 5.4% drop within the manufacture of transport gear and a 4.3% fall in pc, digital and optical merchandise the place disruption to the provision of microchips has hit manufacturing volumes world wide.
Tourism rose sharply after the easing of pandemic restrictions led to a rise in individuals reserving holidays within the UK and abroad, with development of 33.1% for journey businesses and tour operators. Hotels recorded a 23% rise in exercise as extra individuals travelled throughout the UK, contributing to the primary month of constructive development for motels and tenting grounds since August.
However, development within the companies sector of the financial system slowed amid a drop within the well being sector, largely reflecting a fall again from excessive ranges within the NHS test-and-trace and vaccination programmes in December and January when Omicron was at its peak.
Some companies mentioned disruption from the storms Dudley, Eunice and Franklin through the month had hindered commerce, together with within the constructing trade, eating places and takeaways, hairdressing and wonder and leisure parks and vacation centres. Some firms reported a constructive affect, corresponding to these in fencing, torch gross sales and short-term off-grid energy.
Business leaders warned the financial system was prone to wrestle in future months as hovering inflation damages client spending energy.
Suren Thiru, the top of economics on the British Chambers of Commerce, mentioned the federal government wanted to supply extra monetary help to firms and companies to take care of rising price pressures.
“February’s slowdown is likely to be the start of a prolonged period of considerably weaker growth as rising inflation, surging energy bills and higher taxes increasingly damages key drivers of UK output, including consumer spending and business investment,” he mentioned.