BCC warns of delay to UK economic rebound if restrictions continue

10 Jun 2021

A delay to easing coronavirus restrictions this month would “materially” impact the UK’s economic recovery.

This is according to the British Chambers of Commerce (BCC) on Thursday, which forecasts that a rise in consumer spending will result in GDP growth of 6.8% in 2021, although this will be reviewed if the restrictions continue.

Due to a rise in cases of the so-called Delta Covid variant, the 21 June date when restrictions are due to be eased has been thrown into doubt.

According to Suren Thiru, head of economics at the BCC: "The squeeze on activity and the damage to confidence from a marked delay to the full lifting of restrictions or further restrictions to combat COVID variants would materially slow the recovery."

Official figures published on Wednesday revealed a further 7,540 coronavirus cases were registered over 24 hours, the highest since 26 February, Sky News reports.

As such, Prime Minister Boris Johnson said the government would need to determine whether the level of protection from vaccines is sufficient "for us to go ahead to the next stage".

The UK economy suffered its largest fall in 300 years in 2020, as GDP contracted almost 10%.

However, the Bank of England forecasts it will rally in 2021 with the strongest annual growth since WW2.

The latest report by the BCC predicts a "historically robust short-term outlook" for Britain’s economy, fuelled by the strongest growth in spending since 1988.

The head of economics at the BCC added: "The UK economy is in a temporary sweet spot with the boost from the release of pent-up demand, if restrictions ease as planned, and ongoing government support expected to drive a substantial summer revival in economic activity, underpinned by the rapid vaccine rollout."

In addition, the BCC forecasts quarterly growth to be at its most robust in Q2 and Q3 this year, with the overall economy reverting to pre-Covid levels at the beginning of next year.

However, the group said this "assumes that the UK government's roadmap out of lockdown restrictions proceeds as currently planned", going on to add that "another scenario would lead to revisions in the next forecast".