Boris Johnson: Brexit to fix ‘broken’ UK economy model
Goldman Sachs economists have forecast the UK economy will jump by 4.8 percent next year – easily trumping the 3.5 percent predicted for the US, four percent for Germany and 4.4 percent for European Union juggernauts France and Italy. In a further boost, experts from HSBC expect UK GDP to grow by 4.7 percent over the next 12 months, with its forecasts for the rest of the G7 nations ranging from 2.2 percent for Japan and 4.3 percent for Italy.
Britain formally left the EU on January 1, 2022 and, since then, output has surged by almost seven percent as the country battled back from a deep recession. It was triggered by Covid lockdowns that saw GDP plummet by nearly 10 percent in 2020.
The latest forecasts from the International Monetary Fund (IMF) also show the UK economy is set to outperform the EU’s top economies and that of the Eurozone as a whole this year and next.
For 2021, Brexit Britain’s economy is forecast to grow by 6.76 percent – more than double that of Germany (3.05 percent) – the EU’s largest economy.
EU economies combined are predicted to grow at an average of 5.1 percent, while this number falls even further for the Eurozone to 5.04 percent.
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Looking ahead to 2022, UK growth is forecast at 5.01 percent, while this again falls for the EU27 (4.44 percent) and the Eurozone (4.35 percent).
Claus Vistesen at Pantheon Macroeconomics – which downgraded UK growth to 4.2pc and the 3.8 percent for the Eurozone due to the Omicron Covid outbreak – highlighted how the UK is having to make up more ground because of the depth of the recession in 2020, meaning its growth can be quicker.
But in a huge warning to Europe, he told The Daily Telegraph: “The Eurozone economy is probably going to be hit harder by Omicron because already in the fourth quarter, before Omicron, we saw restrictions in Europe due to the Delta wave.
“So I would say the total hit to output is probably going to be bigger in the Eurozone than the UK.”
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The UK has the added advantage of a faster vaccine booster programme which could help limit some of the severity of lockdown restrictions.
Mr Vistesen added: “The booster programmes take time to roll out. The UK is, like early on [in the pandemic] going very fast, but is still staring down restrictions.
“I don’t think that will be very different in Europe – even as Europe ramps up boosters, which they are, it is not going to prevent restrictions being imposed in the near-term.”
Martin Beck, senior economic adviser to the EY Item Club, said the UK’s recovery depends on a positive reaction from consumers, who have been willing to buy more goods during the pandemic but whose confidence may have taken hit from the Omicron outbreak.
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The expert has predicted the UK economy should begin to pick up as activity is supported by “very strong household finances from savings, paying down debt and higher house prices, combined with traditional British consumer appetite to spend”.
A primary reason GDP plummeted so much compared to a number of other similar economies during the pandemic is the country’s official numbers go further to estimate public services output as opposed to only money spent on them.
This means other nations frequently understated the scale of their own economic problems.
Mr Beck said: “Measurement of public sector output cast the UK in a bad light during lockdowns, but will be a plus as things get back to normal.”
Brexit Britain has also enjoyed a number of huge wins in 2021 in the first full year since it departure from the EU.
Lucrative trade deals have been signed, including one with Australia earlier this month which the UK Government described as an “historic” agreement – the first from scratch since leaving the EU.
Global companies are also being attracted to the UK, including oil giant Royal Dutch Shell, which is scrapping its dual share structure and moving its head office to the UK from the Netherlands.
Last month, car manufacturing giant Nissan announced its huge Sunderland plant will be at the centre of a £13.2billion investment, with the hub being used to develop 23 electric cars by 2030.