Forecast: what kind of start to 2022 will new UK GDP data reveal?

The lifting of some Covid restrictions in January may have boosted GDP, but economists fear growth is set to fall sharply in the months ahead. Picture: PA.

Last month, the Office for National Statistics said December’s GDP only suffered a modest contraction of 0.2 per cent despite disruption caused by Plan B restrictions.

The figure for January, which is due to be released on Friday, will include the final week of the month when restrictions were lifted in England.

Michael Hewson, chief market analyst at CMC Markets UK, said the data could see a January rebound with expectations for a monthly expansion of 0.2 per cent, driven by growth across all sectors of the economy.

Although the UK economy posted a 7.5 per cent rebound in GDP growth in 2021, the latest data comes as many economists fear a significant slowdown in growth in the months ahead with the Ukraine crisis adding to cost-of-living woes.

On Friday, the British Chambers of Commerce (BCC) warned that UK economic growth is expected to halve this year amid soaring inflation, major tax rises, and global shocks including Russia’s invasion of Ukraine.

The BCC predicted growth of 3.6 per cent, down from 4.2 per cent in its previous forecast in December, predicting that the UK economy is “forecast to run out of steam in the coming months”.

Business investment is forecast to grow at 3.5 per cent, down from the previous forecast of 5.1 per cent, amid the expected weakening in investment intentions from rising cost pressures, higher taxes and falling confidence.

A message from the Editor:Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions