The Confederation of British Industry is forecasting that it will take 2-years for the economy to bounce back after enduring the worst crisis for over three centuries.
The UK economy will take until the end of 2022 before it recovers from the consequences of Covid-19, according to the latest economic forecast published by the Confederation of British Industry (CBI).
According to the CBI the huge fall in GDP which was triggered by Covid-19 restrictions in March and April coupled with a smaller dip over the winter following November’s second lockdown – means that an economic recovery still has some way to go.
However, steady growth in household incomes and spending will be the drivers for a revival which is predicted to take hold from mid- 2021, as the prevalence of the virus fades, the spike in unemployment eases and earnings recover. As a consequence, the CBI is forecasting 6 percent growth in GDP over 2021, and 5.2 percent in 2022.
Consumer spending has been at the epicentre of the crisis, and is set to drop by 14.7 percent in 2020, with leisure activity curtailed by the government’s attempts to control the spread of the virus and many workers reining in spending due to uncertain employment prospects and hits to incomes.
The Job Retention Scheme has insulated the labour market against bigger job losses, but unemployment will peak at 7.3 percent in Q2 2021.
Tony Danker, CBI Director- General, commented: “Covid- 19 has left deep scars on the economy, but this forecast does offer grounds for optimism. The road to recovery will be long, but the trajectory is positive, and we must do all we can to hasten the journey.”
With GDP expected to decline by 11.1 percent, 2020 will go down as officially the worst year for the UK economy since 1709.
A separate survey conducted by Manpower claims to show that employers in Britain are the least optimistic in Europe. A net balance of -6 of British businesses plan to expand their workforce over the coming quarter compared to +8 in Germany, +3 in Italy and 0 in France. Britain’s retail and hospitality sector was the worst performing with an index of -13.