Daily Sabah logo

Politics
Diplomacy Legislation War On Terror EU Affairs Elections News Analysis
TÜRKİYE
Istanbul Education Investigations Minorities Expat Corner Diaspora
World
Mid-East Europe Americas Asia Pacific Africa Syrian Crisis Islamophobia
Business
Automotive Economy Energy Finance Tourism Tech Defense Transportation News Analysis
Lifestyle
Health Environment Travel Food Fashion Science Religion History Feature Expat Corner
Arts
Cinema Music Events Portrait Reviews Performing Arts
Sports
Football Basketball Motorsports Tennis
Opinion
Columns Op-Ed Reader's Corner Editorial
PHOTO GALLERY
JOBS ABOUT US RSS PRIVACY CONTACT US
© Turkuvaz Haberleşme ve Yayıncılık 2023

Daily Sabah logo

عربي
  • Politics
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • Elections
    • News Analysis
  • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Expat Corner
    • Diaspora
  • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • Islamophobia
  • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
  • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
  • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Reviews
    • Performing Arts
  • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
  • Gallery
  • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
  • TV
  • Business
  • Automotive
  • Economy
  • Energy
  • Finance
  • Tourism
  • Tech
  • Defense
  • Transportation
  • News Analysis

UK economy to return to pre-pandemic level in 2 years

by REUTERS

LONDON Mar 11, 2021 - 1:56 pm GMT+3
A man walks through the City of London financial district amid the COVID-19 outbreak, in London, Britain, March 4, 2021. (Reuters Photo)
A man walks through the City of London financial district amid the COVID-19 outbreak, in London, Britain, March 4, 2021. (Reuters Photo)
by REUTERS Mar 11, 2021 1:56 pm

Britain's economy will return to its pre-COVID-19 level within two years, according to a majority of economists polled by Reuters, who said unemployment would peak at 6.5% towards the end of this year.

The country has suffered the highest coronavirus-related death toll in Europe but is one of the leading nations in vaccinating its population, and Finance Minister Rishi Sunak delivered another big spending splurge last week.

Twenty-two of 31 economists who answered an additional question in the March 5-10 poll said gross domestic product (GDP) would be at its pre-COVID-19 size within two years, including five who said within a year. The other nine said it would take longer.

Sunak said the economy would have recovered by mid-2022, six months earlier than previously forecast.

"The announced measures tilt the risks to our call that real GDP will return to its pre-pandemic level by Q2 2022 to the upside," said Kallum Pickering at Berenberg.

In its annual budget, the government also announced a five-month extension to Britain's huge jobs retention plan until the end of September, something that has so far helped keep unemployment in check.

The unemployment rate rose to 5.1% in the last three months of 2020, its highest in nearly five years but lower than it would have been without the support package.

When asked at what level it would peak, the median response was 6.5%, most likely in the final quarter of this year after the retention scheme ends.

"The resilience of the labour market so far, the extension of the furlough scheme to September and expected robust recovery developing from the second quarter should limit the peak in the unemployment rate to 6.3% - far less than was feared only a few months ago," said Howard Archer at EY ITEM Club.

The government's latest spending spree was accompanied by a warning it would demand more money from companies – and most individual taxpayers too – making it one of the first rich countries to set out a plan to tighten budget policy.

When asked about U.K. fiscal policy over the next couple of years an overwhelming majority, 21 of 25, of economists said Sunak had got it about right. Three said it was too tight and only one said too loose.

"Further stimulus of 65 billion pounds announced on March 3 was very sensible and necessary," said Martin Weder at ZKB.

Lifting lockdown

To fight the coronavirus much of Britain's economy is under lockdown, with businesses closed and citizens encouraged to stay home, so GDP was predicted to contract 3.6% this quarter, sharper than the 3.0% contraction forecast last month.

But as the restrictions are due to be gradually eased, the economy was forecast to grow 4.7% next quarter and 3.0% in the third quarter.

For 2021 as a whole the growth forecast was revised down to 4.6% from 4.7% while the 2022 median was revised up to 5.7% from 5.5%.

Inflation has held stubbornly below the Bank of England's 2% goal, giving it room to cut Bank Rate to a historic low of 0.10% last year, and is not expected to reach target until later this year.

Median forecasts showed borrowing costs would not rise until sometime in 2023, and even then only to 0.25%. None of the 67 economists polled expected any change at the Bank's next decision on March 18.

"We continue to think tightening is still some way off, however, with an inflation undershoot next year," said Allan Monks at J.P.Morgan.

  • shortlink copied
  • Last Update: Mar 11, 2021 2:56 pm
    RELATED TOPICS
    fight-against-terrorism DEUTSCHE-BANK US-LIBYA-RELATIONS
    KEYWORDS
    uk economy covid-19 outbreak stimulus package unemployment
    The Daily Sabah Newsletter
    Keep up to date with what’s happening in Turkey, it’s region and the world.
    You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    A crude oil tanker sails in the Bosporus, on its way to the Mediterranean Sea, in Istanbul, Türkiye, Dec. 11, 2022. (Reuters Photo)

    Türkiye registers better-than-expected current account gap

    current-account-balance
     Eastern Anatolian Fault line triggered another fault segment called the Sürgü fault, Middle East Technical University (METU), Ankara, Feb. 9, 2023. (DHA Photo)

    Accumulated tension of hundreds of years moved Anatolia by 3m

    Harold-Tobin

    Istanbul's spectacular, historical grand bazaars and markets

    Travel

    Istanbul's consulate chronicles: Sudhi Choudhary, Consul General of India

    SUDHI-CHOUDHARY
    No Image
    Photoshoot of the cute kind: Lion cubs make debut in Australian Zoo
    PHOTOGALLERY
    • POLITICS
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • News Analysis
    • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Diaspora
    • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • İslamophobia
    • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
    • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
    • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Performing Arts
    • Reviews
    • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
    • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
    • Photo gallery
    • Jobs
    • privacy
    • about us
    • contact us
    • RSS
    © Turkuvaz Haberleşme ve Yayıncılık 2021