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ECONOMISTS have upgraded the UK’s growth forecasts on the back of positive indications for a successful coronavirus vaccine.
The hope is that Pfizer’s vaccine will mean that lockdown restrictions can be lifted, ending the massive strain on UK businesses.
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The hospitality, entertainment and arts sectors have been particularly hard hit, with many businesses forced to furlough staff, make redundancies or even shut up shop.
UK’s small business owners have also been under significant pressure, with lots of people left ineligible for any government help.
But it’s not all doom and gloom, as forecasters are now predicting that GDP could bounce back to pre-pandemic levels as soon as the middle of next year.
Douglas McWilliams, deputy chairman at the Centre for Economics and Business Research told the Sun: “The vaccine is a game changer… I think there is a reasonable chance we’ll get back roughly to where we were before at the end of 2019 by the middle of 2021.”
The CEBR says that there are three key reasons why the vaccine could make such a big impact on the UK’s economic fortunes.
The first is that it means future lockdowns are extremely unlikely once the current one is over.
McWilliams said: “Social distancing measures may continue for a period, but the spread of the vaccine will mean than medical means rather than social and economic means can be used to control the virus.”
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The second factor is that a vaccine is likely to lift people’s moods, meaning a happier Christmas than previously expected.
The third critical factor, according to the CEBR, is that the travel, tourism and hospitality could bounce back quite quickly meaning a boost for the economy.
This is likely to be bolstered by the fact that Brits have managed to do some serious saving during the pandemic so far,
McWilliams said: “A lot of restaurateurs seem to think they are going to be fully booked in December now and the bookings for ski holidays have shot up.
“The other thing is that people have built up quite a lot of savings during lockdown. In the early days of the crisis we saved nearly 20 billion on top of what we might normally do because we couldn’t go out to spend.
“People have money in their pockets, so if they want to spend… I think we could see consumer spending running quite strongly through the first part of next year.”
Job losses since June 2020
MANY firms have announced job cuts since June as a result of the coronavirus lockdown. These include:
- Shoe chain Aldo collapsed into administration with five stores permanently closed
- Victoria’s Secret plunged into administration, putting 800 jobs at risk
- Fashion chain Quiz put its shop business into administration in , putting 82 stores at risk
- British Gas owners cuts 5,000 jobs, over half of which will be in management
- Airbus announces 1,700 job losses. It expects cuts to be made by summer 2021
- TM Lewin says it will close all 66 of its UK shops, putting 600 jobs at risk
- Harveys Furniture goes into administration resulting in 240 immdiate job losses and puts another 1,000 at risk
- Upper Crust plans to make 5,000 out of its 9,000-strong workforce redundant
- EasyJet says it plans to close hubs at Stansted, Southend and Newcastle, putting 4,500 jobs at risk
- John Lewis is reported to be planning to cut jobs and permanently close department stores
- Harrods has said it is consulting on cutting 680 jobs
- Virgin Money, which owns Clydesdale and Yorkshire Bank, will cut 300 jobs
- Topshop owner Arcadia has announced plans to cut 500 office staff
- Royal Mail is expected to cut 2,000 jobs as a result of coronavirus
- BMW and Mini have announced they will axe 520 jobs at Birmingham, Oxford and Swindon plants
- Pret a Manger is cutting 2,800 jobs with 30 stores to close
- Costa Coffee is axing 1,650 jobs – it hasn’t announced any store closures at this stage
- Gatwick has announced plans to cut 600 jobs, around 25% of its workforce.
- Heathrow is asking 2,500 workers to accept hefty pay cuts or half may lose jobs.
- Hays travel has announced 878 employees out of 4,500 could lose their jobs.
- London City Airport will axe 239 jobs as part of a major restructure.
These factors taken together, could all mean a faster recovery for the UK economy, which would be great news for consumers and businesses alike.
Even better, McWilliams is predicting news on a Brexit deal – which could further boost the economy.
He said: “We’ll also quite likely get a Brexit deal. I suspect that’s been kept on ice till next week because we’ve had enough good news this week.”
The CEBR did urge some caution, saying that the UK government still needs to deal with its massive deficit, which could mean a tough budget later this month.
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McWilliams said: “We’ve probably got the biggest deficit amongst the major economies as a share of GDP and you can’t keep running that so we’ll have to scale back.
“I also think there’s a fair chance we’ll have inflation and higher interest rates, but that’s a problem from late 2021 and more likely 2022.
“But we will see a fairly aggressive tax and spending policy announcement in budget on 25th. If Sunak doesn’t do that then he runs a great risk there could be a sterling crisis.”
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