Omicron casts shadow over UK economy, but optimism lifts markets – live business | Business

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Good morning, and welcome to our renewed coverage of the global economy, financial markets, the eurozone, and business.

Economic growth across the UK has slowed to its weakest point since lockdowns last spring, as the omicron variant of Covid-19 hit confidence.

The latest survey of the Central Bank of Iraq for private sector growth, released this morning, showed that growth in the three months to December fell to its lowest level since April.

Its index of private sector growth fell to +21% from +32% last month, with businesses, professional services, consumer services and distribution reporting slower growth.

The slowdown coincided with the discovery of Omicron, the introduction of measures to slow its spread which severely affected hospitality and retailers.

Looking ahead, growth is expected to continue to slow, as consumer services firms expect activity to decline in the next three months. This would put pressure 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 at CBI, says the UK’s growth outlook has deteriorated – and struggling businesses may need more help.

“There remain significant challenges for businesses heading into Christmas: labor and material shortages, rising costs and new Covid measures limiting a business’s ability to trade during this crucial period.

“With increasing uncertainty – linked to the sharp rise in Omicron cases – it is no surprise that the near-term growth outlook has weakened. The chancellor’s new support measures have provided welcome breathing space to boost confidence and will help hospitality and leisure companies keep their doors open.

“But as the prospect of further action continues to weigh on businesses, the government must monitor the situation closely and ensure that any new restrictions go in a steady step with more targeted cash flow support for those struggling businesses.”

Yesterday, Ryanair more than doubled its annual loss forecast and slashed its January traffic capacity by 33%, warning that recent travel restrictions have weighed on acquisitions.

But investors are hopeful that this latter variant will be less virulent than had been feared, after two studies indicated that people with OMICRON are less likely to be hospitalized than those with the delta variant.

In what scientists called a “qualified good news story,” two studies on Wednesday indicated a lower risk of hospitalization with Omicron. A UK study showed Omicron to have a 20%-25% reduced chance of visiting the hospital and at least 40% risk of overnight admission.

A separate preliminary analysis of Omicron cases in Scotland concluded that the risk of hospitalization may be 70% lower with Omicron than with Delta.

Shares in Asia Pacific markets rose today, after gains in Wall Street and Europe last night. Japan’s Nikkei climbed 0.8%, China’s CSI 300 rose 0.6%, and South Korea’s Kospi climbed 0.5%.

European markets are set to open higher as well.

IGSquawk (IGSquawk)

European opening calls: #FTSE 7359 + 0.24% # DAX 15648 + 0.35% # CAC 7082 + 0.42% # AEX 785 + 0.42% # MIB 26901 + 0.27% # IBEX 8492 + 0.39% # OMX 2348 + 0.55% # SMI 12761 + 0.37% #STOXX 4235 + 0.43% #IGOpeningCall

December 23, 2021 CNBC (CNBC)

European shares rose on signs of hope for omicron https://t.co/I1vAef0lwI

December 23, 2021

Europe’s energy crisis is also deepening, with suppliers warning that “stratospheric” wholesale gas and energy prices threaten a “national crisis” in Britain (more on that soon).

Agenda 9am GMT: Italian business confidence at 9:30am GMT: UK economic activity and social change, real-time indicators 1.30pm GMT: US weekly unemployment claims 1.30pm GMT: PCE up US Price on November 3 GMT: A survey by the University of Michigan on US consumer confidence.

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