The U.K. economy expanded by 2.1% in March, beating analysts’ expectations and confirming the likelihood of a strong rebound after the coronavirus recession. Gross domestic product contracted by 1.5% in the first quarter of the year, due to the general lockdown in place from January, which included closing schools.
- Analysts had expected a 1.5% increase of GDP in March. Output that month increased by 1.9% in services, 2.1% in manufacturing and 5.8% in construction, the Office for National Statistics said on Wednesday. GDP still remained 5.9% below its February 2020 level.
- The 1.5% fall of real GDP in the first quarter of the year compares with an increase of 1.6% in the U.S. and a contraction of 0.4% in the European Union over the same period. GDP is still 8.7% below its level in the fourth quarter of 2019, before the COVID-19 pandemic started.
- The Bank of England last week revised upward its predictions for the U.K. economy, expecting GDP growth this year at 7.25% against 5% in its previous forecast. The U.K. would be back to pre-pandemic levels by the end of the year, the BoE said.
- Prime Minister Boris Johnson confirmed this week that the U.K. remains on track to follow his timetable to ease the economy out of lockdown, with all restaurants, bars and hotels due to reopen next week.
The outlook: After going through the worse recession among industrial nations last year, the U.K. is on track for one of the fastest recoveries, on the back of a successful COVID-19 vaccination campaign that has lifted the hopes of both consumers and businesses.