The UK economy contracted by 1.5% during the first three months of 2021. A stricter lockdown than in other European countries, imposed by the Government of Boris Johnson shortly before Christmas, paralyzed activity. It was the main cause of the decline, but not the only one. The new conditions of the post-Brexit era for commercial exchanges, with much more complex and expensive customs and bureaucratic procedures, led many companies to reduce or even rethink their activity.
Since the National Statistics Office (ONS) began to record and publish data on exports and imports in 1997, it is the first time that imports of goods from non-EU countries have exceeded those that come from the EU. They increased, excluding precious metals, 8.4% and 4.5% respectively.
The decline in the first quarter was not, however, as marked as the worst omens predicted. The UK demonstrated greater resilience than in previous waves of the virus. In February, the Bank of England had announced a 4.2% decrease for the first three months of the year.
The success of the vaccination campaign, which the United Kingdom launched more than a month before the rest of Europe, the immense amount of public aid aimed at supporting companies and workers and a precise de-escalation route to which the Government of Johnson has been faithful to have helped build the economy’s confidence in a speedy recovery. In mid-March, when students returned to schools – and to a lesser extent, to universities – the first signs of a strong rebound in activity emerged. The Bank of England has announced the fastest growth in the last 70 years for the second half of this year. “We are going to see a continued and strong recovery, but we must put all this in perspective,” Andrew Bailey, the governor of the British monetary authority, warned the BBC. “In the last two years we have not seen growth in the economy.”
Rapid adaptation to the confinement of many businesses, increased internet sales and an increase in new construction and repair work made it easier for the recovery to accelerate in March. As of April 12, restaurants, bars and pubs They were able to return to serve on their terraces, and most of the businesses reopened. Consumer spending that same month has reached levels higher than the pre-pandemic period. Exactly 0.4% higher than in April 2020.
“Our economy is clearly back on the right track, and our job creation plans are working,” Economy Minister Rishi Sunak told the BBC, who has pledged to maintain aid, especially the so-called Jobs Retention Scheme (Employment Retention Plan) until the end of September. It is a system similar to the Spanish ERTE, whereby the State assumes 80% of the worker’s salary. Sunak has once again ruled out a possible tax hike in the immediate future, despite the fact that debt has increased by more than 400 billion euros during the last fiscal year (which in the UK is measured from April to April).
The UK remains, despite the rebound in its economy, as the slowest growing country in the G-7 for the past four quarters. The Bank of England’s growth forecast for this year was 5%, although after its optimistic review in February, the authority now estimates that the country’s economy may grow by 7.25%. It would be the highest rate recorded since World War II. More important than the rebound itself, which is anticipated in most world markets, is the conviction of the monetary authority that the predicted increase in unemployment will not occur, once the Government puts an end to its ERTE.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.