U.K. Economy Rose From Lockdown Stronger Than Awaited
The U.K. economy expanded strongly after the winter lockdown. This result was surprising but not nearly close to its pre-crisis volume.
The gross domestic product grew by 5.6% in the quarter instead of the 4.9% earlier estimated result. On Thursday, officials published the data showing that shops and the hospitality industry started to reopen. However, this data showed that the economy was still lower by 3.4% than before the pandemic.
These recent results show that the U.K.’s recovery will soon follow the track of the other most advanced economies such as the U.S. and Eurozone. We should mention that the U.S. is recovering from pandemic-related losses following the euro area. At the end of this year, a slower growth rate might push the Bank of England to resist interest rates until the middle of 2022. Financial markets think that the BOE will increase borrowing costs to normalize surging prices from the beginning of the year.
The current economic situation
For now, experts assume that the economy follows the plan, but the outcome might still be 1.4% below levels before the pandemic-related crisis began.
Last week, the Bank of England reduced its growth forecast to 2.2% after companies faced shortages of materials and workers. Economists assume its 2.2% forecast for the end of 2021 seems more optimistic. In a report, senior economist at Bloomberg Economics, Dan Hanson, wrote that the U.K. faces the challenging mix of decreasing growth and increasing inflation for the end of 2021. He added that as a result, they don’t have an illusion that the economy can reach its pre-pandemic position soon.
On Thursday, the Office of National Statistics published Second-quarter data showing government spending, business investment, and exports. All of these seemed developed more than expected. The ratio seemed down from an improved 18.5% when there was a third national lockdown in the country.
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