David Milliken

LONDON (Reuters – British business grew at the slowest rate since April 2021, as demand dropped for face-toface services. This was according to Sunday’s statement by the Confederation of British Industry.

Britain’s economy was not able to return to pre-pandemic proportions until November. Then, the country was hit by Omicron. This highly contagious variant of Omicron caused restrictions in hospitality and government advice on working from home.

CBI economist Alpesh Paleja stated that “Consumer Services have borne most of ‘Plan B’ restrictions and general Omicron caution with activity here shrinking steeply.”

CBI’s monthly index of growth – which uses quarterly rates from previously published surveys with manufacturers, retailers, and other service businesses – dropped to +12 from +21 December.

It was the lowest reading in April since that of April. This period covered a 3-month period during which restaurants, pubs and other retailers were mostly closed because of a COVID outbreak.

The number of COVID-19-related cases has fallen in Britain sharply from a peak at the beginning January. Most economists believe that output will recover soon.

However, there are still headwinds to many businesses due to sharply increasing inflation. It reached its highest point in almost 30 years in December.

Paleja stated that consumers-facing businesses will have to deal with an increasing squeeze on their household budgets.

On Thursday, the Bank of England will increase interest rates to 0.5%. This is the second rise in two months.

Based on 477 responses, the CBI survey included data from Dec. 20 through Jan. 17.