The UK economy grew 7.5% last year according to the latest GDP figures from the Office for National Statistics.
This was the fastest growth for all G7 countries with a drop off towards the end of 2021 with the Omicron variant.
GDP fell down 0.2% in December as consumer facing services dropped by 3% due to the introduction of restrictions.
This was mainly driven by a 3.7% fall in retail trade while all other services rose by 0.1%.
Consumer-facing services were 8.4% below their pre-coronavirus levels, while all other services were 2.8% above.
Experts warned that the encouraging figures hide challenges facing the economy such as inflation and monetary policy.
Commenting on the figures Quilter Investors portfolio manager Paul Craig says: “The UK has enjoyed a strong bounce back in GDP in 2021, but growth has tempered in Q4 with a small decline in December, not helped by the impact of Omicron on the service sector.
“However, the past is exactly that, and it will be imperative to watch inflation and monetary policy to gauge the likely impact on future growth.
“Inflation has taken root and although it might not be long lasting at its current elevated levels, we do expect it to be a feature over the coming 12 months. This ultimately threatens the economic recovery and the UK’s ability to grow at a sustained rate.
“Also, we must not forget that other risks remain present. While Boris Johnson has called time on Covid, only time will tell if Covid is listening, and we have seen the impact this can have on the UK large service sector.”
AJ Bell financial analyst Danni Hewson adds: “Will 2022 see the UK quickly shake itself off after December’s blip or will supply constraints and those rising prices keep the lid on things?
“One percent growth in Q4 is pretty good going when you think about those empty high streets dressed up for a Christmas party that never took place.
“Household consumption has been a key factor in the UK’s growth story, the question is will households still have the fire power as additional budget pressures exert a choke hold.”
