Experts predict that this year the UK economy is set to grow at its fastest rate on record. Vaccination rollout and relaxing of restrictions will help recovery.
The economy has “proven to be more resilient than seemed possible”. High levels of saving and the easing of restrictions, together with the successful vaccine rollout, set the stage for a surge in spending.
Forecast growth for 2021 has increased from 5% to 6.8%, which would be the fastest rate since official records began.
According to the Office for National Statistics (ONS), the UK’s GDP shrank by a record 9.9% last year, as coronavirus restrictions hit output. This includes the measurement of all activity of companies, governments and individuals in the economy.
The UK economy is expected to return to its pre-pandemic size in the second quarter of 2022. This is three months earlier than original predictions.
The unemployment rate is now expected to reach 5.8% towards the end of this year. This is less than the 7% predicted in January.
Post-Pandemic Bounce-back
The latest forecast suggested the economy will come out of the pandemic with much less long-term ‘scarring’ than originally thought. It looks set for a strong recovery over the rest of the year, and beyond.
Although restrictions did cause disruption, lessons were learned over the last year which helped minimise impact. The UK could be on track for a faster economic bounceback than previously thought.
According to a survey of 3,000 adults, in the first three months of 2021, consumer confidence increased at the fastest rate in a decade. Confidence rose by six percentage points to -11%.
The activity that topped the list of leisure activities most likely to do after lockdown was going to a shop. 6 in 10 people said they plan to return within a month of restrictions lifting.
Meanwhile, the recent easing of lockdown measures has triggered a surge in activity among UK firms. And the looser restrictions have led to the fastest UK private sector growth since late 2013.
The service sector grew faster than manufacturing for the first time since the Covid crisis began. This was mainly due to the reopening of non-essential shops in April.
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