Research Briefing | Apr 9, 2021

UK | Activity continues to firm ahead of the big reopening

Why big fiscal deficits and low inflation can coexi (30)

With the government confirming that non-essential retailers and outdoor hospitality will reopen in England on Monday, our forecast of a strong rebound in activity in Q2 looks to be in good shape. Our new forecast shows GDP growth of 7.2% in 2021, well above the consensus of less than 5%. Even before restrictions are relaxed, a broad range of data suggests that activity has firmed.

What you will learn about:

  • The PMIs have had a patchy record of predicting changes in GDP during the pandemic.
  • Higher new car registrations and stronger high frequency data added to evidence of firming activity.
  • We expect GDP to fall by 2% in Q1, but the risks are skewed towards a smaller fall.
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