UK pandemic recovery outpaces Eurozone as bloc faces rising Covid cases

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Britain’s economy is recovering more quickly from the pandemic than eurozone countries as British consumers take rising inflation in their stride, the latest economic data show.

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The IHS Markit PMI for November, a closely watched score of economic health, ranks the UK significantly better than Europe until recently.

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A UK score of 57.7 is above 55.8 in the Eurozone – any number above 50 indicates growth. The UK’s all-important services sector overtook manufacturing, which saw its strongest expansion in three months.

The withdrawal of pandemic restrictions is restoring consumer confidence with strong growth in business and consumer spending, the report said.

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Meanwhile Germany, which is considering new restrictions as Covid-19 cases spiral, came in at 52.8.

Business confidence there has also been hit by supply problems and rising prices.

In France, the score was 56.3 in the form of a second consecutive monthly decline in manufacturing output due to component shortages, longer run times and reduced consumer demand.

French PM Jean Castex tested positive for the virus today and is self-isolating.

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The strength of the UK results suggest that the Bank of England is likely to raise interest rates in December.

Chris Williamson at IHS Markit said: “A combination of continued booming business growth, further job market gains and record inflationary pressures gives a green light for an interest rate hike in December.”

In Europe, Williamson said: “A strong expansion of business activity in November defied economists’ hopes of a recession, but is unlikely to prevent the eurozone from suffering slow growth in the fourth quarter, especially as the virus escalates.” cases cause renewed disruption to the economy in December.”

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Investec analysts said: “Given that the survey was completed from 10 to 19 November, the report is unlikely to cover the full impact of the stringent social restrictions in countries such as Germany and Austria.

“However, the report highlighted that the rise in COVID-19 infections across the continent is weighing on business optimism about the outlook, with the indicator falling to a ten-month low.”

Flash figures are preliminary and based on responses from most survey participants.

Duncan Brock, group director at CIPS, said: “Another survey record of rising costs for fuel and wage demand led to the highest inflationary pressures since January 1998, as 63% of supply chain managers overpaid for their materials .

“Lack of staff due to supply constraints and production halts caused frustration in the manufacturing sector as some machines went silent.”

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