The UK economy will return to pre-COVID levels by the end of 2021, despite a delay in the end of the lockdown, the CBI has estimated – a year earlier than expected.
However, the trade group has warned of devastation for some still-locked areas if they are not given more support.
The CBI has upgraded its growth forecast for this year to 8.2%, helped by improving household income and increased spending. building savings during the lockdown.
This would mean that GDP will return to its pre-pandemic levels by the end of 2021.
The latest report said: “Despite the delay in lifting all lockdown restrictions for another month, the UK economy is still poised for a successful year.”
It said the economy was poised for “considerable economic growth in the summer”, but “this would not be felt strongly by sectors that are still operating under restrictions”.
Britain suffered its biggest annual economic fall in 300 years in 2020, shrinking by almost 10% due to the pandemic. it took one hit forward The new lockdown took its effect earlier this year.
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The easing of restrictions since spring has fueled hopes strong bounce back, but there were fears that the planned end of the measures on June 21 would be delayed can hinder Recovery.
Confirmation of the four-week delay would mean that some businesses such as pubs and restaurants must continue to operate at limited capacity, while others such as nightclubs must remain closed.
Government has offered relief to an extent by extension of moratorium On commercial landlords evicting struggling tenants in the new year.
but the treasure have opposed Any further extension to the furlough scheme and trade rate relief, both of which are due to start by the end of this month.
CBI’s growth forecast of 8.2% this year is an upgrade from its previous prediction of 6%, while it has raised its outlook for 2022 from 5.2% to 6.1%.
Like other forecasters, it too is allaying its fears about a rise in unemployment.
The trade group estimates that a significant part of the economy’s rebound this year will come from government spending to tackle COVID-19.
But it cautions that stagnant productivity and business investment will continue to drag the long-term outlook.
CBI Director General Tony Danker said there were “really positive signs about the economic recovery this year and next” “with demand and ambition in many areas”.
But he added: “Clearly this does not apply to sectors hardest hit by the pandemic, which still face continued delays and real challenges to remain viable.
“Extension of the commercial rent moratorium will help keep some firms’ heads above water, but the government should do the same on relief in trade rates.
“It would be devastating for hospitality, events or aviation businesses in what we hope is the final phase of restrictions.”