Britain’s economy will outpace every other G7 country in 2022, economists say

The UK economy is set to outpace all other G7 nations for the second year in a row in 2022, experts say. 

Goldman Sachs economists predict that Britain will grow by 4.8% over the next year – a significantly larger figure than the 3.5% predicted for the United States, 4.4% for France and Italy, and 4% for Germany. 

HSBC predicts a similar increase of 4.7% in 2022, again overtaking the 4.3% it predicts for Italy and more than doubling the 2.2% forecast for Japan, The Telegraph reports. 

Britain’s relatively swift vaccine booster programme could be one reason for the impressive predictions, which build on an output expansion of nearly 7% in 2021.

That figure came following a deep coronavirus recession that saw GDP fall by nearly 10% in 2020. 

But others predict that the news might not be quite so good, with growth hampered by ‘a squeeze on living standards from higher inflation, broadening supply-chain disruption and the likelihood of an earlier-than-expected rise in interest rates’. 

HSBC predicts a similar increase of 4.7% in 2022, again overtaking the 4.3% it predicts for Italy and more than doubling the 2.2% forecast for Japan

HSBC predicts a similar increase of 4.7% in 2022, again overtaking the 4.3% it predicts for Italy and more than doubling the 2.2% forecast for Japan

Pictured: Shoppers take to Oxford Street for the Boxing Day sales. Britain's relatively swift vaccine booster programme could be one reason for the impressive predictions, which build on an output expansion of nearly 7% in 2021

Pictured: Shoppers take to Oxford Street for the Boxing Day sales. Britain’s relatively swift vaccine booster programme could be one reason for the impressive predictions, which build on an output expansion of nearly 7% in 2021

In a publication for the EY Item Club last month, authors Hywel Ball, Peter Arnold and Martin Beck write that while growth remains buoyant, ‘rising inflation, supply constraints and the prospect of higher interest rates’ are slowing the recovery.

But, they say, ‘strong financial reserves’ built up by households during lockdowns and a ‘revival in business investment’ will help to offset the constraints on growth.

They predict the UK GDP will grow by 6.9% – down from the 7.6% they predicted in the summer. 

In a publication entitled ‘Why the recovery remains strong – but is being slowed by headwinds’, the authors say the economy has ‘clawed back more of the losses triggered by Covid’ since its previous July forecast.

But, they add: ‘The momentum of the recovery has now slowed, as the scope for catch-up growth has narrowed and bottlenecks and shortages have seen supply fail to keep pace with rising demand.   

In a publication for the EY Item Club last month, authors Hywel Ball, Peter Arnold and Martin Beck write that while growth remains buoyant, 'rising inflation, supply constraints and the prospect of higher interest rates' are slowing the recovery. But, they say, 'strong financial reserves' built up by households during lockdowns and a 'revival in business investment' will help to offset the constraints on growth. Pictured above: EY Item Club tracking Britain's GDP, and its predictions of contribution to GDP growth in the coming years

In a publication for the EY Item Club last month, authors Hywel Ball, Peter Arnold and Martin Beck write that while growth remains buoyant, ‘rising inflation, supply constraints and the prospect of higher interest rates’ are slowing the recovery. But, they say, ‘strong financial reserves’ built up by households during lockdowns and a ‘revival in business investment’ will help to offset the constraints on growth. Pictured above: EY Item Club tracking Britain’s GDP, and its predictions of contribution to GDP growth in the coming years

‘The official unemployment rate is within half a percentage point of its pre-COVID-19 level, and job vacancies and hiring have been running at record highs. 

‘That said, employment is still significantly below early 2020. It’s still too soon to assess the effects of the furlough scheme’s closure in September, although early indications suggest it had only a modest effect on unemployment.

‘The buoyant jobs market – which is emerging remarkably unscathed from the crisis – will support what has been strong momentum in consumer spending. But obstacles to growth are building. 

Pantheon Macroeconomics also downgraded its UK forecast to 4.2% due to the outbreak of the Omicron Covid variant. 

Pantheon’s Claus Vistesen said one factor for Britain’s faster growth is that the 2020 recession was so deep, meaning there is now more ground to recover. 

He said: ‘The booster programmes take time to roll out. The UK is, like early on (in the pandemic), going very fast, but is still staring down restrictions.

‘I don’t think that will be very different in Europe – even as Europe ramps up boosters, which they are, it is not going to prevent restrictions being imposed in the near-term.’

Source

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