UK recovery set to surpass expectations
The UK’s recovery is set to be quicker than anticipated over the next two years as the global economy rebounds from its worst recession since World War 2.
The International Monetary Fund (IMF) is forecasting that the UK economy would grow by 5.3% in 2021 and 5.1% the following year, which would be its fastest rate of growth since 1988. A year ago the UK economy shrank by 9.8%, the most severe recession since 1709.
The revised growth target means places the UK as the third fastest growing economy in the G7 behind the US and France, after it performed the worst in 2020. The global growth forecast has been raised to 6% this year and 4.4% in 2022, increases of 0.8% and 0.5% respectively.
The IMF said that its updated forecasts were a result of “additional fiscal support in a few large economies and the anticipated vaccine-powered recovery in the second half of the year”.
The world economy contracted by 3.3% in 2020, the deepest recession since the Second World War. This figure was minimised thanks to government support which amounted to $16trn across the world, in addition to interest rate cuts, quantitative easing and loans, the report by the IMF said.
The IMF said that the collapse during 2020 could have been three times worse without the aforementioned support by governments.
Out of the develop world, America will see the fastest recovery primarily as a result of the $1.9trn stimulus package by President Biden. The US is the only nation expected to surpass its pre-pandemic levels of GDP.
Other advanced economies will recover more slowly, with the eurozone and Britain expected to return to pre-crisis levels of GDP next year but remaining short of where they would have been under pre-crisis projections.
Unemployment is expected to increase to 6.1%, up from 5%, meaning 400,000 Brits would be out of work this year.