Recent data shows that the UK economy regained its pre-pandemic size at the end of November. Overall growth in the UK was around 6.5% last year, though the forecasts for 2022 are around half of that, at 3.5%.

This time last year, markets expected unemployment to peak around 8% in early 2022. In fact, we have seen employment drop over the course of 2021, from the peak at 5.2% in 2020 to the current level of 4.1% in November 2021. The furlough scheme ended without a bang and the majority of those on furlough appear to have been taken back by their employers or found other employment.

Labour shortages and supply chain disruption have had an impact over the course of last year. These have both been feeding into inflation which has hit a new high of 5.4%. Meanwhile, lasting scarring will be felt most severely in the retail, leisure, travel and tourism and hospitality sectors.

The effect of Brexit on the economy has been masked by the disruption from Covid. Changes to requirements for importers which came into force at the beginning of this year are expected to cause more disruption and may increase prices further.

The UK consumer has had a lot to deal with, between the pandemic restrictions and increasing costs. Despite this, the British Retail Consortium reported satisfactory retail sales for the festive period. They have warned about headwinds for 2022. The housing market also saw a challenging year, with the number of mortgage approvals dropping to a 16-month low after the distortion from a stamp duty break. House prices continue to rise, with a 10% increase over the year.