British economy won’t bounce back from Covid until mid-2022, experts warn
Rishi Sunak may have to break income tax promise says expert
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Reuters polled a panel of 70 economists about when they believed the UK will recover from the financial damage caused by COVID-19. Last year, the UK’s economy had its biggest contraction in more than three centuries.
The poll, carried out from April 7 to April 12, showed the experts believe this year will see Britain’s economy expand by 5 percent.
Next year, the panel believe the economy would expand again by a further 5.5 percent.
Reuters’ March poll saw the figures forecast at 4.6 percent and 5.7 percent respectively.
Paul Dales, from Capital Economics, said: “There are mounting signs that the effects on the economy from the third COVID-19 lockdown have started to thaw.
“We are sticking to our relatively optimistic view that the reopening of the economy and the vaccine programme will allow GDP to regain its pre-pandemic level early next year.”
Chancellor Rishi Sunak said in March he believes the UK’s economy will return to pre-pandemic size in mid-2022.
Speaking to the House of Commons when announcing the 2021 Budget, Mr Sunak announced the Office for Budget Responsibility (OBR) forecast which held GDP will return to pre-Covid levels by mid-2022 but the economy will be three percent smaller than its pre-Covid path in five years.
He added he would do “whatever it takes” to protect the UK economy, and announced a three point plan for it to recover.
Mr Sunak then told MPs: “First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.
“Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.
“And, third, in today’s Budget we begin the work of building our future economy.”
However, the panel think it will take longer than mid-2022 until the UK’s economy recovers from coronavirus.
When asked an additional question on when the UK’s economy would return to pre-pandemic levels, 10 expect it to come one or two financial quarters later than Mr Sunak and the OBR’s prediction.
Six respondents in the poll said it would take longer and five said it would be sooner.
Despite struggles due to the pandemic, optimism among business leaders is at a record high as they believe Brits will splash cash this summer.
A study by the Centre for Economic and Business Research (CEBR) predicted savers will unlock more than a quarter of £192 billion in lockdown rainy-day funds this year, adding £50 billionn to consumer spending.
About £314 million is expected to be spent in the newly reopened hospitality sector in this week alone, it added.
Figures from the Post Office showed that Britons withdrew £590 million in cash in March, the highest monthly figure since September.
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