UK Economy Sees Stronger Rebound in Fourth Quarter, but Household Savings Drop

UK Economy Sees Stronger Rebound in Fourth Quarter, but Household Savings Drop
Commuters, some wearing face coverings due to COVID-19, exit a London Overground train service from Walthamstow, after arriving at Liverpool Street station in London on March 1, 2022. (Tolga Akmen /AFP via Getty Images)

The UK economy grew at a faster pace than first thought in the final three months of 2021 despite the spread of the Omicron variant of coronavirus, according to official figures.

The Office for National Statistics (ONS) said economic growth accelerated to 1.3 percent in the fourth quarter of the year, compared with the initial estimate of 1 percent.

It marked a bounceback on downwardly revised growth of 0.9% in the third quarter of last year.

In a sign of the impact of rising prices, household savings fell to their lowest since the start of the pandemic, with the ratio at 6.8 percent in the fourth quarter.

The ONS said gross domestic product (GDP) is now 0.1 percent below where it was before the pandemic.

But revisions to GDP figures for the past two years means the economy increased by 7.4 percent in 2021—still a record rebound, but lower than the 7.5 percent initial estimate.

The ONS said this comes after it revised the record-breaking GDP drop at the height of the pandemic in 2020 to 9.3%, against the 9.4% first estimate.

Darren Morgan, director of economic statistics at the ONS, said: “GDP grew a little stronger than we first thought in the fourth quarter, meaning it is now only 0.1% below its pre-pandemic level.

“Savings were at their lowest level since the start of the pandemic as household spending rose, mainly driven by rising prices.

“The underlying current account deficit halved, as UK-based businesses earned more income from abroad than foreign-based companies earned in the UK for the first time in a decade.”