It was the fastest growth rate since 1941, however it came after a 9.4% drop in 2020, when the epidemic pushed portions of the economy to shut.
The economy declined by 0.2 percent in December as a result of Omicron limitations in the hotel and retail sectors.
The economy has been “remarkably robust,” according to Chancellor Rishi Sunak.
According to numbers from the Office for National Statistics (ONS), growth in the last three months of 2021 was 1%, which ONS head of economic statistics Darren Morgan described as “quite strong” given Omicron’s spread and the imposition of some limitations.”
Mr Morgan said that growth in 2021 comes from a low foundation in 2020, when the GDP declined dramatically. “And if you compare where the UK economy is now to where it was pre-pandemic, the UK is in the middle of the pack among the G7.”
According to him, the US, Canadian, and French economies were all superior to the UK’s, while the UK was superior to Italy, Germany, and Japan.
The worst of the pandemic’s economic impact has passed, but the aftershocks continue.
Downing Street is unlikely to pass up the chance to brag about the year 2021. The UK has been recognised as the fastest growing economy among these big nations at its hosting of the G7 summit.
The UK economy grew at the fastest rate among the G7 large economies in 2021, at 7.5 percent, indicating a healthy recovery.
As the ONS points out, this should be viewed in the context of the UK’s steepest drop of 9.4% in 2020 when compared to those similar economies. In comparison to the United States, France, and Canada, the economy is still slightly smaller than it was at the end of December 2019. The UK economy is greater than it was in February 2020, on a little more timely basis, utilising monthly statistics not available in other nations.
As the spread of the Omicron variant impacted on the economy in December, the UK economy increased by 1% in the fourth quarter of 2021, a little less than expected.
But, as is the case in these strange times, this already appears to be a distant memory. Looking ahead, the exceptional cost of living pressure, with falling average living standards due to rising energy and other expenses, is the main issue for the economy in 2022.
Ollie Vaulkhard’s coffee shop and restaurant franchise in north east England was enjoying a solid end to 2021 after 18 months of uncertainty.
He told the BBC’s Wake up to Money show that the Vaulkhard Group had a good October and November as the economy improved, but that things slowed when Omicron struck.
“We lost clients, we lost workers due to isolation, and people were being cautious since they had Christmas plans.”
December, he believes, was more of a loss of momentum than a calamity. He explained, “We lost the flow off the top of a glass of champagne.”
A stronger December could’ve been a strong start to 2022, when Mr Vaulkhard anticipates some difficult times.
“We’ve got salary cost hikes, supplier cost spikes, and certain brewery expenses have gone up by 7% – they’re all significant,” he added.
The pandemic and lockdown kept a lid on costs for two years, but suddenly it’s changing.
“I’d like not have them [pricing increases], but given the obstacles we’ve had, this appears to be another hurdle we’ll have to overcome.”
In 2022, the economy is projected to experience challenges. The Bank of England hiked interest rates last week, lowered its economic growth prediction for this year from 5% to 3.75 percent, and warned that people would see the steepest drop in standard of living since records began three decades ago.
According to Pat McFadden, Labour’s shadow chief secretary to the Treasury, the economy will “crawl” this year, with the worst growth of any G7 countries.
“The fact is that the way our government manages our economy is locking us in a cycle of high taxes and poor growth,” he added.
In April, inflation is expected to reach 7%, the same month that employees and businesses will begin to experience increases in their National Insurance (NI) contributions. Mr Sunak has under pressure to cancel the NI hike, but he has stated that it would go forward this month.