Boris Johnson: Brexit to fix Britain’s ‘broken’ economic model
Goldman Sachs economists have predicted the UK economy will jump 4.8% next year, easily beating forecasts of 3.5% for the US, 4% for Germany and 4.4% for the behemoths of the European Union, France and Italy. In a boost, HSBC experts expect UK GDP to grow by 4.7% over the next 12 months, with its forecast for the rest of the G7 countries ranging from 2.2% for Japan to 4.3% for Italy.
Britain officially left the EU on January 1, 2021, and since then output has jumped nearly 7% as the country battles a deep recession. It was triggered by the Covid lockdowns which saw GDP fall by almost 10% in 2020.
The latest forecasts from the International Monetary Fund (IMF) also show that the UK economy is set to outperform the major EU economies and the Eurozone as a whole this year and next.
For 2021, Britain’s Brexit economy is expected to grow by 6.76% – more than double that of Germany (3.05%) – the EU’s largest economy.
The EU economies combined are expected to grow by an average of 5.1%, while this figure drops even further for the Eurozone to 5.04%.
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Looking ahead to 2022, UK growth is forecast at 5.01%, while it falls again for the EU27 (4.44%) and the euro area (4.35%).
Claus Vistesen of Pantheon Macroeconomics – who brought UK growth down to 4.2% and the eurozone down to 3.8% due to the Omicron Covid outbreak – highlighted how the UK needs to catch up more ground due to the depth of the recession in 2020, which means its growth may be faster.
But in a huge warning to Europe, he told the Daily Telegraph: “The eurozone economy is probably going to be hit harder by Omicron because already in the fourth quarter, before Omicron, we saw restrictions in Europe in because of the Delta wave.
“So I would say the total impact on output is likely to be greater in the eurozone than in the UK.”
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The UK has the added benefit of a faster vaccine booster program which could help limit some of the severity of the lockdown restrictions.
Mr. Vissen added, “Recall programs take time to roll out. The United Kingdom is, as at the beginning [in the pandemic] goes very fast, but continues to set restrictions.
“I don’t think it will be much different in Europe – even if Europe ramps up the boosters, which they are, that won’t prevent short-term restrictions from being imposed.”
Martin Beck, senior economic adviser to the EY Item Club, said the UK’s recovery hinges on a positive reaction from consumers, who have been willing to buy more goods during the pandemic but whose confidence may have been hit. affected by the Omicron epidemic.
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The expert predicted the UK economy should start to recover as activity is supported by ‘very strong household finances thanks to savings, debt repayments and rising house prices , combined with the traditional appetite of British consumers to spend”.
One of the main reasons GDP has fallen so much compared to a number of other similar economies during the pandemic is that the country’s official figures go further to estimate the output of utilities as opposed to cash. spent only on them.
This means that other nations have often underestimated the magnitude of their own economic problems.
Mr Beck said: ‘The measure of public sector output has cast the UK in a bad light during the shutdowns, but will be a plus as things return to normal.’
Brexit Britain has also had a number of huge wins in 2021 in the first full year since leaving the EU.
Lucrative trade deals have been signed, including one with Australia earlier this month which the UK government has called a “historic” deal – the first from scratch since leaving the EU.
Global companies are also being drawn to the UK, including oil giant Royal Dutch Shell, which is ditching its dual-share structure and moving its UK headquarters from the Netherlands.
Last month car manufacturing giant Nissan announced that its massive Sunderland factory would be the focus of a £13.2bn investment, with the hub being used to develop 23 electric cars by 2030.