The UK economy will grow by little more than three per centin 2021 after a 10 per cent slump last year, with a double-whammy from Covid and Brexit likely to be felt for years.
Leading economists at the National Institute of Economic and Social Research (Niesr) are also pushing chancellor Rishi Sunak to raid the coffers once more for extra emergency support.
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Niesr slashed its growth forecast for 2021 to 3.4 per cent from a previous estimate of 5.9 per cent, after taking into account the UK’s third lockdown and Covid-19 wave.
It’ll be 2023 before the UK economy returned to pre-Covid levels, it said.
Last week, the Bank of England said it expected that to happen in the first quarter of next year.
“Despite the roll-out of vaccines, Covid-19 will have long-lasting economic effects,” Niesr’s deputy director Hande Kucuk said today.
By 2025, the UK’s economy was likely to be about six per cent smaller than expected before the pandemic, reflecting higher unemployment, weaker business investment and Britain’s more restricted trading relationship with the European Union.
Sunak – who has promised to spend £280bn on the UK Covid-19 response this financial year, taking the budget deficit to a peacetime high – is due to announce his plans for the next 12 months in a budget statement on 3 March.
By Josh Martin
Source: City AM
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