'Time will tell' on UK economic recovery

In our latest Leading Insights, Dr Nikolaos Antypas comments on this week's news about the UK economy.

The second year of the pandemic started with mixed news for the economy. The Office for National Statistics estimated a contraction of 1.5% for Q1 2021, but the overall quarter has benefited by a 2.1% expansion in March. This mid-quarter turnaround can be attributed to the relaxation of the pandemic restrictions on commerce and socialising.

Government officials, including Chancellor Rishi Sunak, are optimistic about the prospects of the UK economy for the remainder of 2021, with record growth to be achieved for the full year. If the UK stays on track with the vaccination programme and there are not significant setbacks on Boris Johnson's "back to normal" plan, the UK may see pre-COVID economic levels in 2022.

It is instructive to note the contrast between the UK and its former EU partners, who still see high numbers of daily new cases, with some, like France, still burdened by severe lockdowns. The UK's early recovery from the pandemic may be a talking point in the years to come on how sovereign independence and flexibility can be the best condition for tackling emergent adversities.

Time will tell, and it cannot do so early enough.