Britain is on course for its strongest year of economic growth since the Second World War as households spend their lockdown savings and businesses step up investment, the Bank of England has said.
After contracting by 9.8 per cent in the worst recession since 1709 last year, growth will bounce back to 7.25 per cent this year. GDP is expected to be at pre-crisis levels by December, faster than forecasts for much of Europe.
Three months ago the Bank was forecasting growth of 5 per cent and for the economy to take three months longer to recover output lost in the pandemic.
The sharp upgrade was driven by the success of the vaccine programme, pent-up demand among households and budget measures that protected jobs and encouraged companies to invest, it reported.
Households are estimated to have tucked away more than £200 billion of lockdown savings, up from £125 billion last November, Ben Broadbent, the Bank’s deputy governor, said. About 10 per cent of those will be spent, the analysis showed, double the amount previously thought.
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