COVID-19: Delay to end of lockdown would hold back economic rebound, businesses warn

Thursday 10th June 2021 08:15 BST

The British Chambers of Commerce (BCC) has predicted that a consumer spending surge will see GDP grow by 6.8% this year - but said it would reassess the forecast if restrictions are extended.

It comes as doubts are cast over the 21 June lockdown lifting date with ministers stressing caution amid a rise in the number of cases of the Indian (Delta) coronavirus variant.

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Suren Thiru, head of economics at the BCC, said: "The squeeze on activity and the damage to confidence from a marked delay to the full lifting of restrictions or further restrictions to combat COVID variants would materially slow the recovery."

Official figures on Wednesday showed another 7,540 COVID-19 infections were recorded in the latest 24-hour period - the most since 26 February.

Prime Minister Boris Johnson said it was clear that case numbers were going up and the government would be looking at whether the level of vaccine protection had been built up by enough "for us to go ahead to the next stage".

Britain's economy suffered its biggest decline for three centuries last year with GDP shrinking by nearly 10%.

Forecasters including the Bank of England expect it will bounce back this year with the strongest annual growth since the Second World War.

The BCC's latest report predicted a "historically robust short-term outlook" for the UK economy, driven by the strongest growth in spending since 1988.

Mr Thiru said: "The UK economy is in a temporary sweet spot with the boost from the release of pent-up demand, if restrictions ease as planned, and ongoing government support expected to drive a substantial summer revival in economic activity, underpinned by the rapid vaccine rollout."

Even in this scenario, the recovery is expected to be "uneven", with manufacturing returning to pre-pandemic levels later this year but hard-hit sectors such as catering and hospitality needing until the middle of 2023 to get back onto their feet.

Trade is also expected to drag on growth in the short-term as a result of post-Brexit disruption and a weak outlook for the eurozone economy weighing on EU demand for UK goods and services.

The BCC forecast predicted quarterly growth at its strongest over the second and third quarters of this year and the overall economy returning to pre-pandemic levels at the start of 2022.

But it said this "assumes that the UK government's roadmap out of lockdown restrictions proceeds as currently planned", adding that "another scenario would lead to revisions in the next forecast".

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