Economic Perspectives –

November’s growth takes GDP above the pre-pandemic February 2020 level for the first time

The latest Perspective from Ruth Lea CBE, Economic Adviser to Arbuthnot Banking Group.


17th January 2022


Ruth Lea CBE


In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest developments in the UK economy:

  • GDP rose by a greater-than-expected 0.9% (MOM) in November and was above the pre-pandemic February 2020 level for the first time, by 0.7%.
  • Services rose by 0.7% (MOM), partly driven by a buoyant increase in retail trade.
  • Within manufacturing, output of motor vehicles by 7.8%, and the ONS commented on “anecdotal evidence around improvements to the sourcing of parts”.  
  • Construction output increased by 3.5% (MOM).
  • The total trade (goods & services, including precious metals) balance showed a surplus of £0.6bn in November 2021, as the goods deficit was outweighed by the services surplus, after October’s surplus of £0.2bn. There was a major improvement in the precious metals surplus.
  • The ONS released revised productivity data for 2021Q3 but warned that they were distorted by the furlough scheme. For the record, output per hour fell by 1.4% (QOQ) in 2021Q3 but was 1.1% above the level of pre-pandemic 2019. Output per worker, however, rose by 0.3% (QOQ) in 2021Q3, but was still 0.6% below the 2019 level.
  • The ONS also reported that public service productivity was 8.1% lower in 2021Q3 than in 2019, as the growth in 18.6% inputs had outpaced output growth of 8.9%.

In addition:

  • The OECD reported that CPI inflation for the OECD area rose to 5.8% (YOY) in November 2021, driven by higher energy prices, the highest rate since May 1996. Energy prices inflation was 27.7% (YOY) in November, the highest rate since June 1980.
  • The World Bank, in its latest Global Economic Prospects, forecast that global GDP growth would decelerate markedly from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023.
  • Oil prices have strengthened in recent weeks, reversing the weakening seen in November. Brent crude oil futures were around $86pb on 14 January, having dipped to under $69pb on 1 December 2021. As widely expected, OPEC+ agreed at their 4 January 2022 meeting to increase their production total by 400,000 bpd for the month of February 2022.
  • UK natural gas prices have eased back since spiking at a record of over 450 pence per therm on 21 December 2021, but they are still very substantially higher than a year ago. On 14 January 2022 the price was 203 pence per therm, compared with 55-65 pence per therm recorded in January 2021. 

Ruth Lea said “The bounce in November’s GDP was noticeably stronger-than expected, though December’s GDP is still expected to weaken as covid-related restrictions were tightened in the month. The ONS noted that, providing their December estimate does not fall by more than 0.2% (MOM) and there are no adverse revisions, GDP in 2021Q4 should be back to the 2019Q4 pre-pandemic level, or even surpass it. However, even with this relatively benign outcome for December, quarterly growth for 2021Q4 would still fall short of the OBR’s October projection, as the outturn for 2021Q3 fell short of the OBR’s projection.” 





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Author -

Ruth Lea CBE

Ruth Lea CBE

Economic Adviser, Arbuthnot Banking Group

Ruth Lea CBE has been Arbuthnot Banking Group’s Economic Adviser since 2007 and was an Independent Non-Executive Director from 2005-2016.

Ruth co-founded Global Vision in 2007 and was Director until 2010, and was previously the Director of the Centre for Policy Studies (from 2004 to 2007), Head of the Policy Unit at the Institute of Directors (from 1995 to 2003) and Economics Editor at ITN (from 1994 to 1995).  Prior to ITN she was Chief UK Economist at Lehman Brothers, Chief Economist at Mitsubishi Bank, worked for 16 years in the Civil Service (the Treasury, the DTI, the Civil Service College and the Central Statistical Office) and was an economics lecturer at Thames Polytechnic (now the University of Greenwich).

She is the author of many papers and articles on economic issues and has been a Governor of the London School of Economics and Council Member of the University of London.

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