LONDON (WNI) — U.K. GDP figures released today reveal that the economy expanded at 7.5% in 2021, following its worst recession in a generation.
Britain’s economy in 2020 contracted 9.4%, among the worst declines in the G7, however following the unwinding of pandemic restrictions, the economy has been in a strong rebound. With its growth of 7.5% in 2021, Britain outpaced the U.S., France and Germany as well as the EU average last year.
The Office for National Statistics however stated that economic activity was still 0.4% below the pre-pandemic performance when compared with the 4th quarter of 2019.
With the U.K. enduring a national lockdown, one of the highest death tolls in the world, and uncertainty over Brexit, its economy faced a perfect storm of shocks. However, despite the ongoing disruption, it’s biggest immediate challenge is spiralling inflation which has also been mirrored in other economies including the U.S., which recorded its largest inflation spike since 1982 in January.
With Britain’s inflation rate now posing a challenge to policy makers, the Bank of England recently increased the interest rate to 0.5% with further hikes expected.
Britain’s economy is set to expand at the fastest rate in the G7 in 2022 according to the IMF, however near term challenges and cost of living increases could hamper growth later this year.