The Office for National Statistics said it was revising its estimate for gross domestic product (GDP) that year after getting access to new data.
By the last three months of 2021, the economy is now estimated to have been 0.6% larger than 2019 levels, compared to a previous estimate that it was 1.2% smaller.
The revision means the UK’s economy is now believed to have grown by 8.5% during 2021, compared to the previous estimate of 7.6%, the ONS said.
The ONS did not change its estimate that GDP shrank by 5.8% in 2020.
The news was welcomed by Chancellor Jeremy Hunt, who was a backbench MP in 2021.
“The fact that the UK recovered from the pandemic much faster than thought shows that once again those determined to talk down the British economy have been proved wrong,” he said.
“There are many battles still to win, most of all against inflation so we can ease cost-of-living pressures on families.
“But if we stick to the plan we can look forward to healthy growth which, according to the IMF (International Monetary Fund), will be faster than Germany, France, and Italy in the long term.”
The ONS’s revisions span the whole period from 1997 to 2019, but include only much smaller changes in the years before 2021.
It said extreme volatility such as the Covid-19 pandemic, which led to the biggest fall in GDP ever seen, make it more tricky to accurately estimate GDP.
Craig McLaren, a senior statistician at the ONS, said: “As we have often pointed out over the last few years, these significant real-world events have added increased levels of uncertainty around initial estimates of GDP.”
He said the data published on Friday includes information from two ONS surveys that “provide more detailed information on the costs facing businesses but take us a while longer to collect”.