IMF says UK economy will bounce back at fastest rate amongst the developed nations

The UK economy will bounce back from the pandemic at the fastest rate among the developed nations, outpacing the eurozone, a report suggests.The International Monetary Fund (IMF) said it expected UK economic output to explode by seven percent this year – a pace it thinks will be matched only by the United States.

Gita Gopinath

IMF chief economist Gita Gopinath (Image: Liu Jie/Xinhua News Agency/PA)

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In April the body’s economists had predicted 5.3 percent growth. Boris Johnson tweeted: “Good signs that our economy is bouncing back faster than expected.

“There are still challenges ahead and we are focused on supporting people through our Plan for Jobs.”

Chancellor Rishi Sunak welcomed the “positive signs” but added: “We still face challenges ahead as a result of the impact of the pandemic.”

The UK’s growth this year is likely to be in part because the economy fell so far last year. Of the G7 nations, the UK was the worst hit in 2020, with output dipping 9.8 percent.

Suren Thiru, the head of economics at the British Chambers of Commerce, said that the UK economy’s recovery was underpinned by the successful vaccine rollout.

He also said it “is benefiting from the release of pent-up demand as restrictions ease and amid ongoing Government support.

“However, any recovery may lose momentum if persistent staff shortages and supply chain disruption stifle business activity and any rises in Covid cases prompt a renewed reluctance among consumers to interact and spend.

“Beyond the strong short-term outlook, the IMF projects notable longer-term economic damage from the pandemic, including weak investment, which if realised may drive an uneven recovery across different places, sectors and groups of people”.

Rain Newton-Smith, the chief economist at the Confederation of British Industry, said the news was in line with its forecast, predicting the UK economy to be back to its pre-Covid level by the end of the year.

But she added: “Mounting staff shortages due to self-isolation and rising cost pressures pose real challenges to this outlook. It’s now critical we bring forward the August 16 date when those who have been double jabbed no longer need to self-isolate if they test negative once contacted.

“We also need a test and release scheme for those who have not been double jabbed.”

She called for a “balanced plan, not just for the next few weeks but also for the next 12 months – one that accomplishes the twin task of keeping our economy open and protecting the public as we live with the virus”.

The IMF’s World Economic Outlook report also highlighted a widening gap between richer and poorer countries.

Chief economist Gita Gopinath said growth prospects for advanced economies this year have improved by 0.5 percent “but this is offset by a downward revision for emerging market and developing economies”.

‘We need long-term plan to keep economy open and protect the public from the virus’

William Murphy

William Murphy

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