BCC Forecast: UK set for an uneven economic recovery, despite record GDP growth

Commenting on the forecast, Suren Thiru, Head of Economics at the British Chambers of Commerce, said: 

“Our latest outlook points to a historically robust short-term outlook for the UK economy.  

“The UK economy is in a temporary sweet spot with the boost from the release of pent-up demand, if restrictions ease as planned, and ongoing government support expected to drive a substantial summer revival in economic activity, underpinned by the rapid vaccine rollout. 

“Beyond the strong short-term outlook, notable economic scarring from the pandemic is projected to weigh on economic activity once government support winds down and drive an uneven recovery across different sectors and groups of people. 

“The UK economy is expected to be increasingly unbalanced through the forecast period with a growing dependence on consumer expenditure to drive growth, while net trade is projected to be a drag on the economy. Such economic imbalances leave the UK more exposed to future economic shocks. 

“The risks to the outlook are on the downside. A more significant surge in inflation would weigh on a consumer led revival by eroding their spending power. The squeeze on activity and the damage to confidence from a marked delay to the planned full reopening or further measures to combat new covid variants would materially slow the recovery.”  

“Beyond the strong short-term outlook, notable economic scarring from the pandemic is projected to weigh on economic activity once government support winds down."

Responding to the forecast, Hannah Essex, Co-Executive Director the British Chambers of Commerce, added:  

“The UK economy, and the business communities that drive it, are showing their propensity to bounce back from a crisis. Historic levels of growth for this year are predicted, a testament to the flexibility and innovation shown by businesses and the resilience of consumers. 

“However, we must not believe that this represents job done. These predictions rely upon the Government hitting its target date for the full re-opening of the economy. If there are bumps in the road, the government must be prepared to extend existing support until all sectors are able to fully trade again. 

“Beyond the immediate optimism, further action will be needed if we are to see a recovery which truly sustains itself and seizes the opportunity to rebuild and renew our economy.  

“Young people now entering the workforce and those who lost jobs during the pandemic are at particular risk of longer-term unemployment. As the economy emerges from the pandemic, we need to create a dynamic and flexible skills system that meets the needs of local employers and supports individuals looking to return to the jobs market. 

“The government cannot afford to ignore the economic impact of decreased exports to Europe. The UK and the EU must now get back around the table and continue talks so they can build upon the arrangements set out in the TCA to deliver long-term improvements to the flow of trade between them.”  

"These predictions rely upon the Government hitting its target date for the full re-opening of the economy. If there are bumps in the road, the government must be prepared to extend existing support until all sectors are able to fully trade again."