The International Monetary Fund (IMF) has raised its forecast for UK economic growth, which is set to outpace the euro zone this year after its slump in 2020, but is unlikely to regain its pre-pandemic size until 2022.
The IMF said the economy will grow by 5.3 per cent in 2021, up from a previous forecast of 4.5 per cent it made in January.
Britain has suffered Europe’s highest Covid-19 death toll and its economy shrank by almost 10 per cent last year – the worst performance among the region’s big economies except for Spain.
However, Britain has moved quickly with its vaccine programme, with nearly half of the population of the UK having had their first jab, compared with less than 15 per cent in Germany and France.
Meanwhile the IMF boosted its 2021 global growth estimate to 6 per cent, on the basis of an accelerated vaccinations and a flood of government spending.
The IMF forecasts published on today also predicted growth of 4.4 per cent for the euro zone in 2021 and 3.6 per cent for Germany, while France was expected to show a 5.8 per cent expansion.
However, the IMF forecasts do not take into account new lockdown measures announced by France and other countries in continental Europe in recent weeks, which will inevitably hit their economies.
Both Britain and the euro zone will take longer to recover from the economic hit from coronavirus than the United States or Japan, which are both on track to return to pre-crisis levels of output this year, the IMF said.
The 0.8 percentage-point upgrade for the UK economy was stronger than increases of 0.1 and 0.3 percentage points for Germany and France respectively, but less than a 1.2 percentage-point improvement for struggling Italy.
For 2022, the IMF raised its forecast to British economic growth slightly to 5.1 per cent, which would be the strongest expansion among Europe’s big economies next year.