UK economy set to overtake all G7 nations in 2022
Britain’s economy is on track to overtake all other G7 countries in 2022 for the second year in a row, analysts say, with the country poised to come back to life after facing a deeper recession than other wealthy nations during the pandemic.
The country’s rapid booster vaccination program to help curb the spread of the Omicron variant of the coronavirus is a major reason for Britain’s optimistic outlook, with economists at Goldman Sachs expecting growth of 4 , 8% next year, exceeding the 3.5% expected for the United States, 4% for Germany and 4.4% for Italy and France.
The International Monetary Fund is even more optimistic, expecting the UK economy to grow 5% in 2022, above the 4.9% expected for the global economy as a whole.
HSBC is also bullish on UK output, expecting the country’s gross domestic product to grow 4.7% over the next 12 months, while its forecast for the rest of the G7 goes 4.3% in Italy at 2.2% in Japan.
Martin Beck, chief economic adviser to the EY Item Club, said Britain’s recovery will depend on consumers spending more of their foreclosure savings, which could be undone by the emergence of the Omicron variant of the coronavirus.
“The recent increase in the number of Covid-19 cases will also weigh on activity in the short term by forcing more people to self-isolate … this likely means that the level of production drops in the second half of December and with With the government undecided on whether to reintroduce restrictions, the outlook for early 2022 remains uncertain, ”Beck said.
Government figures showed there was a record 113,628 new cases of Covid-19 in England on Christmas Day, with 1,281 new hospital admissions of Covid-19 – up 74% by week and the highest number since February 16.
As of 8 a.m. on December 27, there were 8,474 people hospitalized in England with Covid-19 – the highest number since March 5.
The government has decided not to go ahead with tighter restrictions in England, despite the introduction of tighter restrictions in Wales and Scotland.
Business leaders welcomed the decision with UKHospitality chief executive Kate Nicholls, saying the move was a “lifeline” for the industry in England.
The UK economy shrank from a historic rate of 9.8% in 2020, when it felt the full force of the pandemic, becoming the worst-hit economy in the G7.
However, Mr Beck said that one of the reasons the UK’s GDP has contracted more sharply than that of other rich countries is that UK statisticians are doing a more in-depth analysis of public services rather than focus only on the money spent on them, which could cause other countries to underestimate the extent of their declines.
“The measure of public sector output has cast a bad light in the UK during the shutdowns, but will be a plus as things return to normal,” he said.
Pantheon Macroeconomics said one of the causes of Britain’s faster growth rate in 2022 is that it has more ground to recover from the severity of the 2020 recession, particularly relative to the eurozone. .
The global economy is expected to surpass $ 100,000 billion for the first time in 2022, two years ahead of schedule, according to the Center for Economics and Business Research.
The London-based think tank said GDP would be boosted by the continued recovery from the pandemic, although if inflation persists it can be difficult for policymakers to avoid slipping their economies back into recession. .
“The important question for the 2020s is how the world economies cope with inflation,” said Douglas McWilliams, vice president of CEBR.
“We hope that a relatively modest adjustment of the tiller will allow us to control the non-transient elements. Otherwise, the world will have to prepare for a recession in 2023 or 2024. “
In its annual World Economic League table, the CEBR also expects the UK to record significant growth in 2022 and said it is on track to be 16% larger than France in 2036. , despite Brexit.
“We expect the UK to experience a trend growth rate of 2.4% per year from 2022 to 2026, with a slowdown to 1.8% per year from 2027 to 2036,” he said. said, adding that the UK had regained its fifth position in the world. larger economy amid the weakening rupee in India during the Covid-19 pandemic. India claimed fifth place in 2019.
“The UK is set to be overtaken by India again in 2023, before becoming the world’s sixth-largest economy until at least 2036,” the CEBR added.
Source: Le National