The UK has led a variety of league tables in recent times – some flattering, others less so – but when it comes to economic recovery it seems like the country is leading the way. A recent forecast by the IMF showed that the UK is set to recover faster than its G7 peers, with economic growth outstripping all bar the US next year.
Indeed, the latest forecast from the IMF has the UK growing by 7 per cent this year, which marks an upward revision from its April estimate of 5.3 per cent.
It is worth pointing out, however, some of the broader context: much of the upgrade is merely bringing forward growth to 2021 from 2022, but next year the UK’s growth rate of 4.8 per cent is expected to remain the second fastest growing G7 nation, behind the US.
There are several aspects to the rosier prospects facing the UK. According to Gita Gopinath, the IMF’s chief economist, the key differentiators in the latest forecast were “vaccine availability and policy support”. Given that Britain’s vaccine rollout has been faster than expected, the economy has been able to reopen faster and wider than in some other territories, allied to discretionary state support that has been more generous than in some other G7 countries
Not surprisingly, UK chancellor Rishi Sunak was bullish, saying, “There are positive signs that our economy is rebounding faster than initially expected, with the IMF forecasting the UK to have the joint highest growth rate in 2021 among the G7 economies.
“That said, we still face challenges ahead as a result of the impact of the pandemic, which is why we remain focused on protecting and creating as many jobs as possible.”
Direct government support – in the form of loans and job support schemes – is set to end in October, which may impact the rate and strength of the UK’s recovery. But the government is working on its post-Brexit plans, with progress towards FTAs with a number of other countries outside the EU.
In a summer of vaccination and reopening, the future is beginning to look a little rosier.
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