Britain's economy recovered far faster than projected in January, as the number of infections caused by the Omicron coronavirus variety decreased, but the Ukraine crisis clouds the outlook.

January gross domestic product increased 0.8% on a month-on-month basis following a 0.2% fall in December — the most significant monthly rise since June, according to the Office for National Statistics — with surging inflation heightening the prospect of an interest rate hike next week.

While January's growth puts the economy 0.8% larger than its pre-pandemic peak in February 2020, experts anticipate worse times ahead.

"The Ukraine conflict is exerting significant downward pressure on energy and commodity prices, which, if sustained, will drive inflation even higher than expected," said Alpesh Paleja, lead economist at the British Chambers of Commerce.

"The imperative to accelerate the deployment of new energy generation — renewables, nuclear, and increased storage capacity — remains acute."

While the British economy appears to be better than it was pre-pandemic, it is still roughly 4% smaller than it would have been had the economy continued to expand at its trend rate over the prior decade, according to Reuters.

According to the ONS, if extra spending on health care were eliminated, production would be around 1.2 percent lower than pre-pandemic.

In January, hospitality venues benefited from a surge in pent-up demand following the significant cancellation of events before Christmas, resulting in a rise in activity in what is traditionally the year's slowest month.

"Food and beverage output increased 6.8%, as revellers shrugged off the shock of Omicron and celebrated once more. This aided the consumer-facing services sector's overall growth of 1.7%," according to Susannah Streeter, a senior investing and markets analyst at Hargreaves Lansdown.

"Construction sites were also bustling in January, with construction increasing by 1.1 percent, while wholesale and retail trade increased by 2.5 percent, accounting for the majority of January's growth in services."

However, the primary growth driver was human health and social work activities, as the high demand for additional healthcare services increased, while consumer-facing services remained 6.8% below pre-crisis levels and manufacturing output remained 2% below pre-crisis levels, Ms. Streeter added.

In response to the findings, the Exchequer Rishi Sunak stated that the Russia-Ukraine conflict had increased economic uncertainty.

"Throughout the pandemic, we have provided unprecedented support, putting our economy in a strong position to deal with current cost of living challenges," he said.

"We are aware that Russia's invasion of Ukraine is wreaking havoc on the economy, and we will continue to monitor its impact on the UK."

The Bank of England indicated last month that the economy was on course to expand by approximately 3.75 percent this year, with inflation peaking at roughly 7.25 percent in April. These projections, however, have been surpassed by the inflationary effects of Russia's invasion of Ukraine on financial markets and worldwide trade.

"Given the cost of living crisis and the impact of the Ukraine war, this is probably the best the year has to offer," said Paul Dales, chief UK economist at consultancy Capital Economics.

Inflation is now predicted to soar above 8%, with some experts anticipating double-digit readings of 10% or more.

With this in mind, policymakers at the Bank of England are expected to hike interest rates next week for the third time in three months.

"Given the deteriorating situation, which includes new sanctions on Russian oil exports and severe disruptions to other commodities, policymakers are expected to cap the increase at 0.25 percent, pushing the bank rate to 0.75 percent," Ms. Streeter explained.

"The objective will be to dampen demand while preserving the economy's new spurt of life during this period of increased uncertainty."

UK equities climbed on Friday as economic growth exceeded expectations, with the mid-cap index on track to post its best weekly performance in more than a year.

The blue-chip FTSE 100 index climbed 0.8% in early trading, taking its weekly rise to 2.5 percent. The FTSE mid-cap index gained 1.1% and was on course to post its most significant weekly gain since February 2020.

Energy equities were up 2.1 percent, having gained 5.8 percent this week due to a surge in crude oil prices following Russia's invasion of Ukraine.