The island economy will benefit from the success of the vaccination campaign, but the exit from the European Union weighs a lot.
British rulers often have the ability to return to life like the Phoenix, this mythical bird that always rises from its ashes.
Churchill, who was named as the chief responsible for the defeat of Dardanelles, one of the worst disasters of the Great War, would figure out how to become a “national hero” during World War II.
And Boris Johnson, who initially underestimated the scale of the health crisis and accounted for a record number of deaths, is now revered as a best strategist in the field of vaccine campaigns.
Will the British economy also have the ability to regenerate?
60% of UK vaccinated
After a 9.8% recession in 2020, due to a massive epidemic that paralyzed entire regions, activity is currently struggling to recover.
From October to December 2020, GDP increased by 1.3%, due to containment and a number of restrictions. And the reasons that produce the same effect should hardly be a surprise, with an estimated increase of 2.7% in the first quarter of 2021.
On the other hand, the second quarter gives rise to greater optimism for the success of the vaccination campaign. About 60% of the population has already received their first dose of the vaccine and no deaths occurred on Monday, March 29, for the first time in six months.
Towards a gradual decrease in measures
This is why Boris Johnson has announced measures to ease, with the resumption of so-called non-essential businesses on April 12, with supporters returning to the stadium from May 17 and lifting the total of final sanctions at the end of June. . . “In a few days, I’ll finally be able to go to the barber,” said the tenant at 10 Downing Street.
And that’s why the Bank of England, which has kept its key rate at 0.1%, gave a “more optimistic message in the short term” by listing a number of positive developments since the February meeting: better combined than the global development plan and the new support plan In the United States, the progress of vaccination campaigns in the United Kingdom and the rapid decline in Kovid figures, the possibility of banning activity faster than expected, the proclamation announced by the British government in the 2021 budget “, Slavna Nazarova, economist Agricultural credit. Therefore, “domestic consumption in the second quarter may be better than forecast in the February report, thus a possible upward revision of its growth forecast is possible, which is 5% in the February report by 2021.”
If the horizon is clearing on the home front, it is not so on the outer front due to Brexit. Exports declined by 5% in January compared to December and imports increased by 13%.
“This sharp decline was expected, mainly reflecting the negative impact of the new border controls”, explains Natixis economist Dirk Schumacher. However, if some disruptions are transitory, “exit costs are not negligible and barriers to trade created by Brexit lead to weak integration into the European value chains of the United Kingdom”.
Furthermore, due to the bones of controversy between the European Union and the United Kingdom (on the Northern Irish Protocol, fishing quotas, regulatory equivalents in financial services, etc.), the environment is rarely conducive to business investment.
So the Phoenix is not yet swept away, but it is getting ready.