By Jason Douglas and Paul Hannon
LONDON – The UK economy is expected to offset the loss of the coronavirus pandemic by the middle of next year, as a rapid vaccination program is driving the economic recovery.
Forecasts from the Office of Budget Responsibility, Britain’s fiscal watchdog, show that the economy is expected to reach its pre-pandemic size by mid-2022, CFO Rishi Sunak said on Wednesday. It is six months earlier than the OBR forecast in November.
That forecast reflects expectations that the UK economy will recover rapidly later this year, as rapid vaccine development will enable the government to reintroduce restrictions on everyday life and the economy.
The UK has so far administered at least one dose of vaccine to more than 30% of the population and plans to offer vaccination to its entire adult population by the end of July. To date, the United States has vaccinated about one-fifth of its citizens. The European Union has 7.5% of the population.
Still, the economy is expected to shrink in the first months of the year after the government introduced a new deadlock in January to stop the spread of a highly transmissible new variant of the virus, which was first discovered in the UK in November. The variant has since spread all over the world.
Mr Sunak said the pandemic scar will remain for several years, when he presented his latest tax and spending plans to lawmakers on Wednesday. OBR expects the UK economy to be about 3% smaller in five years than it would have been if the pandemic had never come.
“The damage that coronavirus has done to our economy has been acute,” says Sunak. He added that “when we are on the road to recovery, we need to start fixing public finances.”
(END) Dow Jones Newswires
03 March 2021 08:15 ET (13:15 GMT)
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