Britain’s economy, rattled first by Brexit and then by the COVID-19 pandemic, is ready to see a period of growth.
However, with new variants of COVID-19 threatening to spread, will the UK’s economy successfully recover?
Lockdowns in the nation are finally set to ease. The UK has a favorable expected GDP growth of 2.5% over the next quarter (Reuters).
However, that pace is set to slow to a dismal .9% as soon as early 2022. This number may lower even further in the next few weeks as the British government keeps a careful eye on exponentially growing COVID-19 Delta cases.
With the UK’s strict quarantine laws, economists expect consumers to be easily influenced by reports of growing cases. British consumer trends seem to reflect that citizens would rather limit their social contacts and outings rather than risk having to isolate for ten days.
This fear can be pointed towards the National Health Service’s COVID-19 contract tracing app, which “pings” those who have been potentially exposed to the virus and encourages them to self-isolate.
Additionally, like many other countries, the UK is experiencing sharp inflation due to supply shortages. Accordingly, the Bank of England is toying with the idea of halting its government bond purchases early.
Even as the rest of the globe reopens, it is unclear if inflation will settle. Many countries are experiencing labor shortages that continue to exasperate supply shortages.
The UK is no different, as it struggles with its worst labor shortage crisis since 1997 (The Guardian). Brexit has only worsened this issue for England as it has drastically slowed the numbers of overseas workers in the UK.
Although countries across the world are facing a similar set of problems, England’s economic recovery lags behind many of its peers. The UK’s GDP growth during the first few months of 2021 came in last compared to its G20 Summit colleagues.
Regardless of virus resurgence fears, the British government plans to begin withdrawing the 150 billion pound stimulus that propped up the country during the height of the pandemic.
While the UK’s post-pandemic economic recovery remains uncertain, it’s clear that it will depend on consumer habits, rather than government policy.