KPMG has downgraded its forecast for the UK’s GDP figures this year after the country was placed in lockdown after Christmas.
The accountancy and financial services giant predicts 2021’s first quarter may see GDP growth contract by 2.6% after an estimated growth of 1.5% in 2020’s last quarter.
An overall GDP growth rate of 4.2% is forecast for 2021, with the economy not returning to pre-Covid levels until the first quarter of 2023.
Yael Selfin, chief economist at KPMG UK, said: “The new year saw a setback in the fight against the COVID-19 pandemic, with a third nationwide lockdown likely to see the economy contract slightly in the first quarter of this year, albeit to a much milder extent than the fall seen at the beginning of the pandemic.
“Even though we expect the lockdown to last until the end of March, more businesses are expected to be operating this time and many have now adapted successfully to remote working and are managing to grow their output despite the restrictions.”