UK economy grew more slowly than thought before Omicron hit

Britain's economy grew more slowly than previously thought in the July-September period, before the Omicron variant of the coronavirus posed a further threat to the recovery later in the year, official data showed on Wednesday.

Gross domestic product in the world's fifth-biggest economy increased by 1.1% in the third quarter, weaker than a preliminary estimate of growth of 1.3%.

That was slower than the economy's 5.4% bounce-back in the second quarter when many coronavirus restrictions were lifted, the Office for National Statistics said.

Investors are braced for a slowdown in growth in the fourth quarter of 2021 due to a rise in Covid-19 cases caused by Omicron which has hurt Britain's hospitality and leisure sector and hit retailers.

"Our revised figures show UK GDP recovered a little slower in the third quarter, with much weaker performances from health and hairdressers across the quarter, and the energy sector contracting more in September, than we previously estimated," ONS Director of Economic Statistics Darren Morgan said.

"However, stronger data for 2020 means the economy was closer to pre-pandemic levels in the third quarter," he said.

“With the economy reopening in the third quarter, households saved less in the latest period.

“However, household saving was still up on pre-pandemic levels.”

The level of GDP was 1.5% below where it was at the end of 2019, revised up from the previous estimate of 2.1% below its pre-pandemic level.

Business investment fell by 2.5% in the third quarter from the previous three months and was nearly 12% below its pre-pandemic level.

The Bank of England is hoping for a revival of business investment to help improve Britain's longer-term growth prospects.

Britain balance of payments deficit widened to 24.4 billion pounds to as goods exports fell, goods imports grew and foreign companies received more income from their investments in the United Kingdom.