Omicron hit to UK economy less sharp than feared in December

LONDON — Britain’s economy shrank by a less-than-expected 0.2% in December when the rapid spread of the Omicron variant of COVID-19 prompted many Britons to work from home and avoid their usual Christmas socializing which hit many services businesses.

Gross domestic product in December was 6.0% higher than a year earlier, the Office for National Statistics said.

Economists polled by Reuters had forecast a 0.6% monthly fall in GDP and for output to be 6.3% higher than a year earlier.

“Despite December’s setback, GDP grew robustly across the fourth quarter as a whole with the NHS (National Health Service), couriers and employment agencies all helping to support the economy,” ONS economist Darren Morgan said.

“Overall, GDP in December was in line with its level in February 2020, before COVID-19 struck, while in the fourth quarter as a whole, it was slightly below that of Quarter 4 2019,” he said.

November’s GDP month-on-month growth rate was revised down to 0.7% from a previous estimate of 0.9%.

The Bank of England has said it expects to keep on raising interest rates to slow demand as Britain’s inflation rate heads above 7%, more than three times the BoE’s target rate. (Reporting by David Milliken Editing by William Schomberg)