United Kingdom Economic Snapshot
Economic Forecast Summary (May 2021)
Strong GDP growth of 7.2% in 2021 and 5.5% in 2022 is projected as a large share of the population is vaccinated and restrictions to economic activity are progressively eased. Growth is driven by a rebound of consumption, notably of services. GDP is expected to return to its pre-pandemic level in early 2022. However, increased border costs following the exit from the EU Single Market will continue to weigh on foreign trade. Unemployment is expected to peak at the end of 2021 as the Coronavirus Job Retention Scheme is withdrawn. Inflation is set to increase due to past increases in commodity prices and strong GDP growth, but should remain below the 2% inflation target.
Reform Priorities (April 2021)
Going for Growth 2021 - United Kingdom
Vulnerable social groups have been particularly affected by the pandemic and poverty is set to increase as jobs are lost and self-employed see incomes dwindle, accentuating regional differences. The COVID-19 crisis has emphasized the need to re-train and up-skill the population, secure access to affordable housing by reducing bottlenecks to supply and to revive investment.
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2021 Structural Reform Priorities
- Education and skills: Boost funding for lifelong learning
- Infrastructure: Increase public investment, prioritising digital infrastructure and deprived regions
- Housing: Improve housing supply and competition in construction
- Labour market: Increase support for full-time good-quality childcare
- R&D and digitalisation: Ensure a balance between direct R&D support and tax incentives