Economists: Impact of Omicron on UK economy expected to be modest – FT

They have accused ministers of setting policy based on political expediency not strategy. But they believe Omicron is likely to pose only a modest jolt to the economy in December and January.

With Omicron’s health impact proving to be less severe than feared in a heavily vaccinated society, many economists now believe they will be able to look back at the latest variant as nothing more than an annoying blip for the UK economy by the spring.

Economists have little doubt that when the official figures for December and January are published, they will show a contracting level of output as consumers hunkered down before Christmas and into the new year, spending less in shops, pubs and restaurants.

A bigger problem for the growth outlook this year, economists said, was the rise in the cost of living, which would hit real incomes, especially after April.

Most expect the recovery from the initial pandemic shock to continue, with the pre-pandemic level of GDP surpassed in the first half of this year. But even with continued above-average growth rates, the UK economy is unlikely to return to its pre-pandemic trend this year.