U.K. Set to Lead Europe’s Rebound Then Slide to Back of the Pack
The U.K. will lead the economic recovery among major European nations with its fastest growth in almost half a century before sliding to the bottom of the pack by 2023.
That’s the outlook of economists surveyed by Bloomberg, who have revised up their forecasts for 2021 growth to 6%. That would mark the strongest growth since 1973, and ahead of Germany, France, Italy and Spain. The upgrade of 0.6 points from last month reflects the U.K.’s rapid vaccine rollout, allowing the government to loosen lockdown rules.
Further out though, the picture is less rosy. Analysts cut their prediction for 2023 growth by 0.4 points to 1.7%, suggesting headwinds like Brexit and the U.K.’s lagging productivity will reemerge. As a result, Britain will be expanding at a slower pace than it peers.
The findings underscore the difficulty policy makers have in deciding whether to scale back stimulus for the economy. While investors are starting to anticipate a tightening in monetary policy, Bank of England Governor Andrew Bailey and his colleagues want to see signs that the rebound is sustainable before acting.
The central bank last week said it sees the U.K.’s economic output recouping losses by the end of this year instead of in early 2022. Its Chief Economist Andy Haldane, by far the most optimistic official on the BOE’s rate-setting committee, said the fallout from the virus means the nation is in for a period of quick recovery followed by slower growth.
©2021 Bloomberg L.P.