Is the UK taking advantage of its vaccine success?
UK GDP ever so slightly edged up in February, growing 0.4 per cent according to today’s update from the Office for National Statistics. No surprises here: there were no changes to lockdown restrictions between January and February, which gave the economy little room for manoeuvre.
The ONS has revised January’s GDP fall from 2.9 to 2.2 per cent: still a contraction, but another good indicator that businesses have significantly adapted to lockdown rules, which has meant that this winter’s lockdown didn’t plunge GDP down to record levels as it did last spring. Still, February serves as another reminder that – despite spectacular market innovation – there is a ceiling on the extent to which the economy can recover while significant economic activity remains barred.
Economists are expecting March’s figures – when schools returned and slightly more socialising was allowed – to show an improvement, and to continue to head uphill from there. Not only is each month leading up till 21 June now expected to re-establish major sectors of the economy, but the vaccine boost is a factor here too: with more than half of Britons now estimated to have Covid-19 antibodies (up from roughly 13 per cent in December), businesses can feel increasingly confident that the chances of another lockdown are waning (and, as emphasised by the Prime Minister over and over again, that these steps forward are ‘irreversible’). Capital Economics remains bullish in its recovery timetable, estimating a GDP recovery by early next year.
But there is still a long way to go. Last month The Spectator highlighted data from the OECD, which offers a weekly update comparing a country’s current GDP level with the previous year. Its findings have been roughly aligned with the ONS’s, but it has published its data weeks ahead. If the UK stayed on the same track, the OECD was predicting that February's update would place UK GDP levels at around 7.8 per cent smaller than last year. Today, the ONS confirmed the UK economy is still 7.8 per cent smaller, exactly on track with the OECD.
Now that the accuracy of the OECD forecasts has been confirmed, increased confidence in its data should put even more emphasis on its other findings, including its claim that – until recently – the UK had one of the strictest lockdowns in the developed world.
Despite UK Covid-19 rates now hovering around the lowest in Europe – and now that the top nine most vulnerable groups have all been offered their first dose of the vaccine – the UK’s lockdown remains on the stricter end, raising questions about the extent to which Britain is taking advantage of its early and successful vaccine boost, as Europe works to pick up its pace on the vaccine rollout.