The pound has risen very slightly on Friday (14/01/2022), despite better-than-expected UK data.

UK GDP for November

GDP rose 0.9% m/m in November, above the forecast of 0.4%, while Manufacturing Production jumped 1.1% m/m, surpassing the expected 0.2%. Both figures were higher than the October releases and demonstrate that the UK economy continues its recovery. GDP for Q4 is expected to reach or go beyond the pre-pandemic level (Q4 2019), eliminating any possibility for disappointment for the December GDP report.

The Gross Domestic Product released by the National Statistics measures the total value of all goods and services produced by the UK. It is considered as a comprehensive measure of UK economic activity and as such, if it rises, this has a positive effect on the GBP, while, if it falls, then this is seen as negative for the British currency.

Despite the good news, business groups have warned that the economy remained weak, as inflation has continued to rise, and the Bank of England could further raise interest rates. Suren Thiru, the head of economics at the British Chambers of Commerce, said: “Stronger growth in November is likely to be followed by a modest fall in output in December and January, as consumer caution to socialise and spend, and mounting staff absences sparked by Omicron and plan B limit activity. While the UK economy should rebound once plan B measures are lifted, surging inflation and persistent supply chain disruption may mean that the UK’s economic growth prospects remain under pressure for much of 2022.”

While analysts anticipate stronger growth in 2022, consumer spending will be limited due to the rising cost of living. Wages are expected to go up around 3.5% in 2022, as prices rise.

The chancellor, Rishi Sunak, congratulated the “grit and determination of the British people” and noted how “amazing” it was to see the economy back to pre-pandemic levels in November. He said: “The government is continuing to support the economy, including through grants, loans and tax reliefs for businesses, and our plan for jobs is ensuring people up and down the country have fantastic opportunities. We all have a vital part to play to protect lives and jobs, and I urge everyone to do theirs by getting boosted as soon as you can.”

Johnson under criticism

Prime Minister Boris Johnson is under criticism after revelations that his staff held parties during the Covid lockdown. Boris Johnson is already facing calls to resign from the opposition and some senior Tories after he admitted attending a drinks’ gathering in May 2020. According to the latest news, Downing Street staff held two parties during Covid restrictions with both taking place the night before Prince Philip's funeral. The Telegraph reported that the events took place on 16 April 2021 and continued past midnight. Prime Minister Boris Johnson was not at either party, but the events raise questions about the culture at No 10, Labour's deputy leader Rayner said.

Johnson has urged MPs to wait for the outcome of an investigation into lockdown gatherings by senior civil servant Sue Gray, which is expected next week.

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