Hello and welcome to our continued coverage of the global economy, financial markets, euro area and business.
Economic growth across the UK has slowed to its weakest point since lockdowns last spring, as the omicron variant of Covid-19 hits confidence.
The CBI’s latest private sector growth survey, released this morning, shows growth in the three months to December fell to its lowest level since April.
Its private sector growth index fell to + 21% from + 32% last month, with business and professional services, consumer services and distribution companies all growing slower.
The slowdown coincided with the discovery of Omicron and the introduction of measures to slow its spread that hit the hospitality industry and retailers hard.
And looking ahead, growth is expected to continue to slow, with consumer service companies expecting activity to decline over the next three months. That would weigh on the economy, which is still 1.5% below pre-pandemic levels, and was already slowing over the summer before Omicron hit:
Alpesh Paleja, Chief Economist of CBI, says UK growth prospects have deteriorated and struggling businesses may need more help.
“Significant challenges remain for businesses as Christmas approaches: labor and material shortages, rising costs and new Covid measures are restricting the ability of businesses to do business during this critical time.
“With increasing uncertainty – coupled with the surge in Omicron cases – it’s no surprise that near-term growth prospects have weakened. The new supports announced by the Chancellor have offered a welcome respite to build confidence and will help hospitality and leisure businesses keep their doors open.
“But with the potential for further measures still weighing on businesses, the government must monitor the situation closely and ensure that any further restrictions go hand in hand with additional targeted cash support to struggling businesses.”
Ryanair more than doubled its forecast for annual losses yesterday and slashed January traffic capacity by 33%, warning that the latest travel restrictions have hit revenue.
But investors are hoping this latest variant may be less virulent than feared., after two studies indicated that people with Omicron are less likely to be hospitalized than those with the Delta variant.
In what scientists described as “qualified good news,” two studies on Wednesday highlighted a lower risk of hospitalization with Omicron. A British study showed that Omicron has a 20 to 25% less chance of a hospital visit and at least a 40% less risk of being admitted overnight.
A separate preliminary analysis of Omicron cases in Scotland concluded that the risk of hospitalization may be 70% lower with Omicron than with Delta.
Stocks rallied in Asia-Pacific markets today, after gains on Wall Street and Europe last night. from Japan Nikkei jumped 0.8%, while China CSI 300 is 0.6% higher, and South Korea Kospi gained 0.5%.
European markets should also open to the upside.
Europe’s energy crisis is also worsening, with suppliers warning that ‘stratospheric’ wholesale gas and electricity prices threaten a ‘national crisis’ in Britain (more on this shortly ).
- 9am GMT: Confidence of Italian companies for December
- 9:30 am GMT: Economic activity and social change in the UK, real-time indicators
- 13:30 GMT: weekly jobless claims in the United States
- 1:30 p.m. GMT: US personal consumption expenditure index increases in November
- 3 p.m. GMT: University of Michigan survey of U.S. consumer confidence