Almost every indicator is pointing in the same direction. Footfall on the high streets is up. Payments by debit and credit card are rising. The strongest business surveys since 2013 suggest that the Brexit hangover was short-lived. Firms are starting to hire. The housing market is red-hot.
Growth estimates are being revised up sharply amid signs that consumers didn’t even wait for lockdown restrictions to be lifted before going on a spending spree.
As things currently look, it would come as no surprise were the UK to post its highest postwar growth rate this year, beating the previous record of 6.5% in 1973. Not only was the hit to the economy in the first quarter much less severe than originally expected, it also seems as if the bounceback in the spring and summer will be stronger, too.
The forecast prepared for Rishi Sunak by the Office for Budget Responsibility at the time of the March budget pointed to 4% growth this year. That estimate is already out of date. Earlier this month the International Monetary Fund pencilled in a 5.3% increase in UK gross domestic product this year. That looks a bit pessimistic as well. According to Thomas Pugh of Capital Economics, Britain will rise from the bottom of the European super league GDP table in the early stages of the pandemic to the top by the end of 2022, when he forecasts output to be 3.7% above its pre-pandemic level.
Rapid recoveries are what is needed to limit the long-term scarring from the pandemic
It is not only Britain that is beating expectations; the same is true across the developed world. It has been a while since the US grew more quickly than China but it is on course to do so this year. The eurozone will be slower to recover, given the faltering start to its Covid-19 vaccine programme but looks set for a spurt in activity from mid-2021 onwards. Vaccines and lots of stimulus are combining to unleash pent-up demand.
Rapid recoveries are what is needed to limit the long-term scarring from the pandemic, since they will tend to limit the business failures