Written by: Keith Tully
Delaying the full reopening of the country beyond June 21st would have a material impact on the UK’s economic performance this year, according to the British Chambers of Commerce (BCC).
The business group is optimistic about the prospects for an economic recovery in the second half of 2021 but concerned that any further restricting of economic activity would hamper growth in the short term.
“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,” said the BCC’s head of economics Suren Thiru in a statement.
Daily increases in the number Covid cases in the UK have raised fears that the planned June 21st reopening of the economy may need to be delayed.
However, with many millions of people across the country having now been fully vaccinated against the virus, it could yet be that the government’s schedule for reopening can remain unchanged.
The BCC has been confident of seeing a significant upturn in consumer confidence and spending over the summer but has made clear it would be necessary to revise those forecasts if restrictions remain in place beyond the end of June.
Expectations at the BCC have been that the UK will see the strongest increase in consumer spending in decades if the reopening plan can be kept in place, with sharp growth in GDP forecast for the third and fourth quarters of 2021.
The organisation’s latest estimate is that the full scope of the British economy will have returned to pre-pandemic levels by the first quarter of next year, with GDP growth tipped to top 5 per cent over the course of 2022.
“The UK economy, and the business communities that drive it, are showing their propensity to bounce back from a crisis,” said Hannah Essex, co-executive director at the BCC.
“However… these predictions rely upon the government hitting its target date for the full re-opening of the economy.
“If there are bumps in the road, the government must be prepared to extend existing support until all sectors are able to fully trade again.”
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