The economic growth prospects for the UK in 2021 have been significantly upgraded in the EY ITEM Club’s Spring Forecast 2021.
The UK economy is expected to grow by 6.8% in 2021, up from the 5.0% growth predicted in January. This improved near-term outlook means the UK economy is expected to regain its pre-covid peak in Q2 of 2022.
The upgraded forecast strongly suggests that at the level of the overall economy, the UK will emerge with much less damage than originally feared. Expected first quarter performance of a 1% fall in output rather than the 3% to 4% previously anticipated illustrates just how innovative and flexible UK businesses and consumers have been in adjusting to restrictions on activity.
Andrew Dann, EY’s Channels Island Managing Partner, said: “The UK economy has proven to be more resilient than seemed possible at the outset of the pandemic.
"Businesses and consumers have been innovative and flexible in adjusting to Covid-19 restrictions and, while restrictions have caused disruption, lessons learned over the last 12 months have helped minimise the economic impact.”
“This latest forecast suggests that the UK economy will emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond.
"While the outlook for the Jersey economy is not quite as certain, with recent reports concluding the economy is likely to suffer more long-term ‘scarring’ and a more gradual recovery predicted over the next five years, the newly strengthened prospects in the UK is positive news for both Guernsey and Jersey and will give hope of a stronger recovery across the Channel Islands.
"Both islands have proven to be resilient in the face of the challenges and uncertainties and our financial strength will continue to put us in a strong position to deal with any further disruptions.”
Pictured top: Andrew Dann, EY’s Channel Islands Managing Partner.
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