Friday, May 27

The UK economy grew 2.1% in March, beating expectations as the vaccine-driven recovery picked up speed

The UK economy is gradually reopening from coronavirus lockdowns.

The UK economy grew 2.1% in March, considerably more than expected by economists, as business and consumer optimism grew as COVID-19 cases fell and the vaccination drive picked up speed, according to data on Wednesday.

The 2.1% month-on-month expansion in gross domestic product was above expectations for growth of 1.3% and was helped by schools reopening as part of the country’s “roadmap” out of lockdown. It was the strongest monthly growth since August 2020.

March’s increase helped the UK economy shrink by marginally less than expected in the first quarter, notching up a 1.5% contraction due to the restrictions put in place in January that were then gradually eased, the Office for National Statistics said.

The Bank of England said last week it expects UK GDP to grow 7.25% in 2021, up from a prediction of 5% growth made in February.

Britain has been one of the fastest countries in the world to vaccinate its population against coronavirus. More than 53% of people have now received at least their first dose, according to Our World In Data.

It also has one of the highest death tolls from COVID-19 in the world, with over 127,000 fatalities.

The vaccine rollout and falling cases has allowed the government to stick to its roadmap for reopening the economy. Non-essential shops and pubs and restaurants with outdoor seating reopened in April. People will be allowed to sit inside those venues later this month, and cinemas will reopen.

“Despite a difficult start to this year, economic growth in March is a promising sign of things to come,” chancellor of the exchequer Rishi Sunak said.

“Our plan for jobs is working-following the comprehensive package we put in place, almost 2 million fewer people are expected to be out of work than initially forecast, and the UK economy is in a strong position to grow quickly as we emerge from the pandemic.”

Sunak put in place a furlough scheme that has subsidized the wages of people who otherwise might be unemployed, which is widely credited with holding down the UK’s unemployment rate to around 5%.

Ruth Gregory, senior UK economist at Capital Economics, said: “The burst of growth in March shows that the recovery has been gathering momentum more quickly than we had thought and suggests that the risks to our forecast for the economy to return to its February 2020 level by the end of 2021 are to the upside.”

The pound was down 0.04% against the dollar at $1.414, just off its highest level since February.