UK Economic Recovery Forecast to Lag Peers
(04 January 2020 – United Kingdom) Economists expect the British economic recovery in 2021 to be more sluggish than other countries, because of a lower starting point, a larger services sector, low business investment and lingering Brexit impacts.
A survey of 100 economists revealed that the majority expect the size of the UK economy to fail to return to pre-pandemic levels until Q3 2022, despite the expectation of a strong retail spending rebound from the rollout of the COVID-19 vaccine. Increased unemployment, bankruptcies and the impact of Brexit are expected to limit the pace of the recovery. Many economists assert that the government should not raise taxes at least until the economy has fully recovered, and others note that, given low interest rates, the pressure to reduce the burden of public debt is low.
“Output will grow but not return fully to its pre-pandemic level. The extent to which recovery compares with that in other countries will be heavily influenced by whether or not the UK and EU have a free trade agreement. If not, the UK recovery will be in the bottom 30 per cent or so compared with other OECD countries” commented London School of Economics Professor of Public Economics, Nicholas Barr.
“The British economy is likely to fall slightly short of regaining its pre-pandemic size in 2021. Since it has more ground to regain than countries that have been less affected by the pandemic in economic terms, I expect that Britain’s growth rate will be higher than peer countries in 2021, but overall GDP will be lower than peers relative to pre-pandemic levels” stated Social Market Foundation Chief Economist, Aveek Bhattacharya.
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