By David Milliken
LONDON, Jan 30 (Reuters) - British businesses grew at the
slowest pace since April 2021 during the past three months,
after demand for face-to-face services slumped due to the
Omicron variant of coronavirus, the Confederation of British
Industry said on Sunday.
Britain's economy only recovered to its pre-pandemic size in
November, before being hit by the highly infectious Omicron
variant which led to government advice to work from home and
restrictions on hospitality in Scotland and Wales.
"Consumer services have borne the brunt of 'Plan B'
restrictions and general Omicron caution, with activity here
shrinking sharply," CBI economist Alpesh Paleja said.
The CBI's monthly growth index - which is based on quarterly
growth rates from its previously published surveys of
manufacturers, retailers and other services businesses - fell to
+12 in January from +21 in December.
That was the lowest reading since April's, which covered a
three-month period when pubs, restaurants and non-essential
retailers were largely closed due to a previous COVID wave.
COVID-19 cases in Britain have fallen sharply since a peak
in early January, and most economists think output will soon
recover.
But there are headwinds for many businesses from sharply
rising inflation, which hit its highest in nearly 30 years in
December and is forecast to exceed 6% in April when regulated
household energy bills rise.
"Consumer-facing firms will also have to contend with a
deepening squeeze on household budgets," Paleja said.
The Bank of England is expected to raise interest rates on
Thursday to 0.5% from 0.25%, the second increase in less than
two months.
The CBI survey was based on responses from 477 firms between
Dec. 20 and Jan. 17.
(Reporting by David Milliken; Editing by Alistair Smout)