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UK economy forecast to expand 7% in 2021

© Lucas Davies

Goldman Sachs have forecasted the UK economy to rebound by 7% in 2021.

Thanks to the fast rollout of the vaccine later next week, the UK is set to be the first Western country to begin a vaccine programme. Coupled with rising confidence in the business sector and the largest vaccine programme in Britain’s history – 2021 is set to be a much brighter year for the economy.

For most of 2020, COVID-19 has battered British businesses and created a start-stop environment for companies with lockdowns and restrictions changing frequently. This dynamic is estimated to be significantly reduced by the middle of next year, with half of Britain’s population forecast to be immunised by the spring – faster than any other industrialised nation. The speed at which the UK rolls out the vaccine will play a factor in the economic rebound however.

Having been one of the hardest hit economies from Covid-19 alongside Spain, the UK suffered a more than 20% contraction in GDP earlier this year.

With the Bank of England’s bond-buying programme and new round of stimulus anticipated after 1st January, the economy could start to gain considerable traction as businesses have more certainty. This will be especially true once Brexit is decided either with or without a deal.