COVID-19: UK economy ‘will rebound to pre-pandemic levels by end of 2021’ – despite late lockdown end | Economic news
Britain’s economy will rebound to pre-COVID levels by the end of 2021 despite the delay in ending the lockdown, the CBI predicted – a year ahead of schedule.
However, the business group has warned of devastating some still-closed sectors if they don’t receive more support.
The CBI raised its growth forecast for this year to 8.2%, helped by increased spending fueled by improving household incomes and accumulated savings during confinements.
This means that GDP will rebound to its pre-pandemic level by the end of 2021.
The latest report said: “Despite the delay in lifting all lockdown restrictions for another month, the UK economy is still poised for a watershed year.”
He said the economy was poised for “considerable economic growth over the summer” but that “it will not be felt so strongly by sectors still working under restrictions”.
Britain suffered its biggest annual economic decline for 300 years in 2020, shrinking almost 10% thanks to the pandemic. It took a hit again at the start of this year as new blockages have taken their toll.
The easing of restrictions since spring has fueled hopes for a strong rebound, but it was feared that the postponement of the planned end of the measures on June 21 could hinder recovery.
Confirmation of the four-week delay means some businesses such as pubs and restaurants must continue to operate at limited capacity, while others, such as nightclubs, must remain closed.
The government offered some relief by extend a moratorium on commercial landlords evicting troubled tenants in the new year.
But the treasure resisted any further extension of the leave scheme and business rate relief, both of which are expected to start declining by the end of this month.
The CBI’s forecast of 8.2% growth this year is an improvement on its previous forecast of 6%, while it also raised its outlook for 2022 from 5.2% to 6.1% .
Like other forecasters, he is also easing his fears about rising unemployment.
The business group estimates that a significant portion of the economy’s rebound this year will come from government spending to fight COVID-19.
But he warns that stagnant productivity and business investment will continue to weigh on the long-term outlook.
CBI Managing Director Tony Danker said there were “really positive signs of economic recovery this year and next” with “pent-up demand and ambition in many areas”.
But he added: “It is clear that this does not apply to the sectors hardest hit by the pandemic which, even now, face continued delays and real challenges to remain viable.
“Extending the moratorium on commercial rents will help keep some businesses’ heads above water, but the government must also do the same for corporate tariff relief.
“It would be devastating for the hospitality industry, events or aviation businesses to fail on what we hope will be the last leg of the restrictions.”