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The British business grew at the slowest pace since April 2021 for the past three months, after a demand for face-to-face service declined because the omicron variant of Coronavirus, the UK industrial confederation said on Sunday.
The British economy only recovered with pre-pandemic size in November, before being hit by a highly contagious Omicron variant which led to government advice to work from home and restrictions on the hospitality in Scotland and Wales.
“Consumer services have undergared the burden of ‘Plan B’ and Omicron General caution, with activities here shrinking sharply,” said CBI Alpesh Palaja economist.
The monthly CBI growth index – which was based on the quarterly growth rate of the manufacturer’s survey, retailer, and other service business which was previously published – down to +12 in January from +21 in December.
It was the lowest reading since April, which covers a three-month period when the pub, restaurant and non-essential retailers are mostly closed due to previous Covid waves.
The Covid-19 case in England has fallen sharply since the peak in early January, and most economists think output will soon recover.
But there are headwinds for many businesses from inflation that have increased sharply, which reached the highest in almost 30 years in December and were estimated to exceed 6% in April when the regulation of household energy bills rose.
“Companies facing consumers must also compete by extorting a household budget that is increasingly deep,” Palaja 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.
