Following the reveal of this figure, the UK economy is expected to return to its Q4 2019 level in Q2 2022, which is three months earlier than forecast.
Furthermore, EY’s Item Club believes the country’s GDP contracted by just over 1% quarter-on-quarter in the first quarter of 2021, rather than the 3-4% contraction expected in January’s Winter Forecast.
Growth of 4-5% is predicted to take place in 2021’s second quarter, with the government’s “roadmap to recovery” and vaccine rollout helping consumer and business recovery.
Howard Archer, chief economic advisor to the EY Item Club, said: “The UK economy has proven to be more resilient than seemed possible at the outset of the pandemic.
“Businesses and consumers have been innovative and flexible in adjusting to Covid-19 restrictions and, while restrictions have caused disruption, lessons learned over the last 12 months have helped minimise the economic impact.”
He added: “Our latest forecast suggests that the UK economy will emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond.
“There will be some issues to look out for though, not least inflationary risks which will grow as the recovery gains pace and monetary policy remains accommodating. Interest rates aren’t likely to rise until late 2022 or early 2023 at the earliest.”