Britain’s economy will bounce back to its pre-Covid level by the end of the year, despite a delay to the end of lockdown restrictions, economists said today.
The CBI has upgraded its latest forecast for the UK economy, predicting GDP growth of 8.2 per cent this year, up from a previous forecast of 6 per cent.
CBI economists’ new prediction of a “breakthrough year” means the UK economy will return to pre-Covid levels a year earlier than expected.
Economic growth this summer will be driven by pent-up consumer demand and a surge in spending after savings were amassed during lockdowns, as well as improving household incomes, the CBI said.
The latest report said household spending will fuel just over a quarter of GDP growth in 2021, and 70 per cent of growth in 2022.
In 2022, GDP will grow by 6.1 per cent, up from a previous forecast of 5.2 per cent, the CBI predicted.
UK business investment is set to “claw back some of its losses” as confidence improves, but will remain 5 per cent below its pre-Covid level at the end of 2022, the CBI said.
Britain suffered its biggest fall in output in 300 years in 2020, as the economy shrank by almost 10 per cent thanks to Covid lockdowns.
The CBI warned that sectors that have not yet been able to reopen due to continued lockdown restrictions will not make a recovery, unless they are given more government support.
“The data clearly indicates that there is pent up demand and ambition across many sectors,” said CBI Director-General, Tony Danker.
“Clearly this does not apply to the hardest hit sectors from the pandemic who even now face continued delays and genuine challenges to stay viable. Extending the commercial rent moratorium will help keep some firms’ heads above water, but the Government must also do the same on business rates relief,” Danker said.