During the fourth quarter of 2021, the United Kingdom's GDP decelerated its recovery with respect to the previous quarter, registering a year-over-year growth rate of 7.22%. Inflation increased at a year-on-year growth rate of 4.90%. The labour market continued to recover from the economic effects of the Covid-19 pandemic, resulting in a slight decrease in the unemployment rate and an acceleration in employment. In addition, the pound sterling depreciated against the dollar, recording an average exchange rate of 1.35 $/£ during the fourth quarter.


Macroeconomic outlook report: UK 4Q21

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Macroeconomic overview

  • During the fourth quarter of 2021, UK GDP growth increased by 0.67 p.p. compared to the previous quarter, to register a year-on-year rate of change of 7.22%. This increase in the year-on-year rate was promoted by a greater dynamism in the service sector, especially in the health and social work sectors, together with the growth of household consumption which registered an increase of 6.35 p.p. compared to the previous quarter.
  • Regarding the labor market, the unemployment rate decreased by 0.20 p.p. compared to 3Q21, to stand at a rate of 4.10%. Meanwhile, employment in the UK recorded a year-on-year growth rate of 1.05%, after an acceleration of 0.52 p.p. compared to the previous quarter.
  • During the fourth quarter, the British pound sterling depreciated by $0.03 per pound compared to the previous quarter, to an exchange rate of 1.35 $/£.
  • Inflation increased from the previous quarter to a rate of 4.90%. Thus, CPI managed to surpass even more the Bank of England's 2% target, largely reflecting the global supply-chain problems and elevated energy prices.

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