UK economy should recover fully by end of 2021

Significance

The revised forecast reflects the economy’s resilience to the re-imposition of COVID-19 restrictions during January and April this year. The UK economy is expected to return to its pre-pandemic level by the end of 2021, but the IMF is more cautious about the economy’s medium- to long-term prospects.

Impacts

• Higher Office for Budget Responsibility forecasts in October could facilitate greater spending capacity in the 2022 budget.
• A further deterioration in tensions over Northern Ireland in the autumn would risk damaging EU-UK trade relations.
• UK imports from the EU will face more disruption once the government ends its temporary light-touch approach to imports, in 2022.