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UK economy to bounce back to pre-Covid levels this year

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Consumer spending is driving the recovery, boosted by a temporary rise in government spending this year to beat the virus
UK economy to bounce back to pre-Covid levels this year

The UK economy is ‘poised for considerable economic growth over the summer’, said the Confederation of British Industry in its latest Economic Forecast.

It predicts that UK GDP is set to bounce back to its pre-COVID level towards the end of 2021.

The organisation said the boost was helped by the easing of many COVID-19 restrictions, the rapid roll-out of vaccines and the unleashing of pent-up demand.

But it warned that the growth won’t be felt as strongly in those sectors still working under restrictions, such as hospitality.


The CBI forecasted GDP growth of 8.2% this year, and 6.1% in 2022, following a historically large (-9.9%) fall over 2020.

It said household spending is the linchpin of this recovery, driving just over a quarter of GDP growth in 2021, and 70% of growth in 2022.

Consumer spending is bolstered by an improvement in real incomes, and households spending some of the excess savings they built up during lockdowns.

The CBI now also expects a much lower peak in the unemployment rate (5.5% in Q3) than in December (7.3% in Q2 2021). This is in part due to the extension of the Job Retention Scheme into the autumn, the resilience of the labour market so far, and expectations of a much stronger economic recovery.

A temporary boost to government spending on tackling the virus is another significant contributor to growth this year, driving around half of the rise in GDP over 2021.

CBI director-general, Tony Danker, said: “There are really positive signs about the economic recovery ahead this year and next. The data clearly indicates that there is pent up demand and ambition across many sectors.

“The imperative now must be to seize the moment to channel this investment into the big drivers of long-term UK prosperity. That’s why it’s the right time for Government to come forward with far more detailed plans on everything from decarbonisation, to innovation to levelling up.”

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