UK Economy Grew 0.4% amid Confidence from Vaccine Rollout, rebounding from a sharp drop the previous month. Reportedly, third coronavirus lockdown restrictions were eased by the British government this week, which opened its gyms, hairdressers and nonessential shops for the public.
Additionally, pubs and restaurants also reopened their doors, but only for outdoor services. It is to be noted that confidence in the market has been boosted due to the rapid rollout of COVID-19 vaccines which clearly indicates towards positive growth in future.
On Tuesday, the Office for National Statistics stated that the expansion was led by a 1.3% increase in manufacturing output and a 1.6% boost in construction. The increase in growth was brought about by the manufacturing and construction sector as most nonessential shops remained closed due to a nationwide lockdown.
Howard Archer, chief economist for the EY Item Club stated that “Following the modest improvement in February, the economy seems to have taken significant steps forward during March as increasingly confident businesses prepared for the significant opening up of the economy on 12 April and consumers looked to start releasing pent-up demand,”. He further added that “The government’s road map out of lockdown does seem to have lifted both business and consumer confidence.”
But it is to be noted that the economy still remains 7.8% smaller than it was last February as the U.K. recovers from its worst recession ever recorded in 300 years. It is to be noted that Britain’s coronavirus-ravaged economy suffered its biggest crash in output in more than 300 years in 2020 when it had slumped by a humongous 9.9%. But luckily, the UK economy avoided heading back towards recession at the end of the year and thus this presents a positive outlook for the economy.
It was reported through Official figures that gross domestic product (GDP) had grown by 1.0% from October through December.
“As and when restrictions are eased, we continue to expect a vigorous rebound in the economy,” said Dean Turner, an economist at UBS Global Wealth Management.
Talking about Britain’s economic resilience, Britain’s economy grew by 1.2% in December alone, after a 2.3%fall in output in November when there was a partial lockdown in place. This significantly points towards greater resilience to COVID restrictions than at the start of the pandemic.
However, the Bank of England has forecasted that the economy will shrink by 4% in the first three months of 2021 due to the new lockdowns and Brexit disruption.
It thinks it will take until early 2022 before GDP regains its pre-COVID size, assuming vaccination continues at the current rapid pace, which outstrips the rest of Europe’s. However, many economists think recovery will take longer.