Kate Andrews Kate Andrews

Will the third wave stop our economic recovery?

The UK economy continued to rebound in April, with this morning’s update from theOffice for National Statistics showing GDP grew 2.3 per cent — slightly better than the consensus prediction of 2.2 per cent. The reopening of non-essential shops and outdoor hospitality on 12 April contributed to the boost. GDP now sits 3.7 per cent below its pre-pandemic levels, the closest we’ve come to achieving full recovery.



Forecasters are increasingly confident that we’ll be back to pre-pandemic levels in 2021, even possibly before Q4. Capital Economics says ‘early indicators suggest that GDP growth was strong in May as well,’ when more indoor activity opened and numbers on indoor and outdoor socialising relaxed further. Oxford Economics agrees next month should see ‘another strong gain of more than 2 per cent’ which would get us tantalisingly close to where we were in February 2020.

But the bigger question now isn’t what happened last month (which saw reopening stay on track) but what’s to come. The 21 June is increasingly in doubt. The R-rate is estimated to be well above 1, and the Indian variant is possibly much more transmissible than officials were hoping would be the case.

But this wave of cases is radically different from the previous ones: as Professor Philip Thomas lays out in his cover piece for the magazine this week, the virus is now hitting what Chris Whitty described as a ‘wall of vaccinated people’. According to Thomas, this should keep hospitalisations down to manageable levels that don’t threaten NHS capacity.

But the situation remains tricky. Due to the lag between rising infections and hospitalisations, much of the data the government would like to see will be coming in right around 21 June.



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