The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.
Independent, business-led coalition which aims to provide ‘new ideas to ensure that the UK emerges from the pandemic a stronger and fairer economy’ published its final findings. The report, ‘Ambition 2030’: A Partnership for Growth, argues that the pandemic has had a bigger impact on the UK economy than any event in the last 300 years, and sets out policy recommendations including the creation of at least one new globally competitive industry cluster in every part of the UK by 2030, a commitment to develop a Great British Supply Chain, a ‘Help to Train’ scheme to assist in halving the projected skills gap by 2030, a detailed plan for the decarbonisation of homes over the next fifteen years and the creation of a new Community Infrastructure Endowment Fund to match-fund business investment in communities and the introduction of a Wellbeing at Work Guarantee.
Despite this hit, the UK economy is expected to grow even faster than that of the United States this year due to the vaccine programme delivering the speediest recovery since the Second World War, according to a forecast from Goldman Sachs. The forecast says British GDP is predicted to grow by 7.8% this year, while the US will see only a 7.2% growth. Meanwhile, economists at Consensus Economics expect the UK economy to grow by 5.4% this year, compared to the 4.2% expected in February.
Similarly, the Bank of England’s deputy governor Ben Broadbent has said that the UK’s economy will see “very rapid growth” over the next couple of quarters, driven by an increase in consumer spending after lockdown. According to the BoE’s forecasts, people will spend about 5.0% of their Covid-19 savings, though Broadbent added that it was “possible” they would spend more. “The burden of proof it seems to me should be as to why that wouldn’t happen, rather than why it would, so I have tended to be on that more optimistic side,” Broadbent said.
Despite increasing optimism over the UK’s recovery from the pandemic due to the pace of the vaccination programme, the Bank’s policymakers have been divided over the UK’s prospects for a long-term recovery. But Broadbent joins Andy Haldane, the BoE’s chief economist, in the optimistic camp, though he warned that a “roaring twenties” style recovery was far from assured.
Resolution Foundation examined the impact of the crisis on older workers, assessed the impact of previous crises, and placed this crisis in the context of longer-term trends in employment among older workers. Although workers aged under 25 have seen by far the largest fall in employment in the past year, workers aged over 50 have seen the biggest decline in employment since the 1980s due to the impact of the Covid-19 pandemic. The fall in the employment rate among the over-50s was twice as big as the decrease for workers aged 25 to 49, with older workers also taking longer to return to employment. The Resolution Foundation has urged the Government to ensure that its extensive Covid employment support schemes can be tailored to the needs of older workers, while retraining opportunities should be extended.