Economy on way to full recovery this year

BRITAIN is poised for a year of stellar growth as the economy bounced back by 2.3 per cent in April.

As consumers rushed out to hairdressers, outdoor pubs and shops, the country’s output – or gross domestic product (GDP) – expanded at its fastest rate since last July.

Now the economy is just 3.7 per cent smaller than it was pre-pandemic, according to the Office for National Statistics (ONS), setting the UK on course for a full recovery this year.

Last night Chancellor Rishi Sunak said: ‘The figures are a promising sign that our economy is beginning to recover.’ It is thought 1.8million people were on furlough at the end of May, down from a peak of 8.9million last year, according to the ONS. April’s rebound was the third consecutive month of growth and follows a record 9.8 per cent slump in the economy last year, the worst in more than 300 years. Retail sales grew by 9.2 per cent, boosted by a 69.4 per cent rise in clothing sales.

Holiday lets and caravan parks saw activity picking up by 68.6 per cent and pubs and restaurants saw sales grow by 39 per cent.

Thomas Pugh, economist at Capital Economics, said: ‘The jump in GDP in April was another sign that consumers are raring to spend as the economy reopens. And all the early indicators suggest GDP growth was strong in May as well. As such, our forecast of the economy regaining its pre-pandemic level by the autumn is on track.’

But while UK inflation is still below the Bank of England’s 2 per cent target, pulling in at 1.5 per cent in April, it had more than doubled from 0.7 per cent in March.

The Bank of England’s departing chief economist, Andy Haldane, is worried that the cost of living could soar even higher as the economy bounces back unless the central bank cuts back its money-printing programme, which was designed to boost activity in the pandemic.