The Bank of England on Thursday said the U.K. economy is on track for a stronger economic recovery than it previously expected, underpinned by the country’s comparatively quick vaccination campaign, CNBC reports.
The BOE upgraded its 2021 growth outlook for the world’s fifth-largest economy to 7.25 percent, slightly above analyst expectations and up from 5 percent as forecast in February.
It follows a drop in first-quarter U.K. GDP of 1.5 percent — shallower than expected — and as restrictions on economic activity ease and coronavirus disease infections in the U.K. continue to decline.
Reflecting on these developments, the BOE said second-quarter GDP would likely “rise sharply,” while economic output was expected to recover to pre-pandemic levels through the remainder of the year. It had previously said the U.K. economy would recover to pre-pandemic levels in the first quarter of next year.
The U.K. economy contracted by 10 percent in 2020 — the worst annual performance in more than three centuries. It was more severe when compared to most other European economies, partly due to a slower move to implement strict public health measures to curb the spread of the coronavirus.
The BOE’s Monetary Policy Committee on Thursday voted unanimously to hold interest rates steady and maintain its quantitative easing program at current levels as the U.K. looks to recover from the ongoing coronavirus crisis.
It means the central bank’s main lending rate remains at an all-time low of 0.1 percent and its target stock of asset purchases is left unchanged at £895 billion (US$1.2 trillion).
The BOE’s brighter economic forecast comes as the country gradually emerges from lockdown and more people are vaccinated.-Photo: Sky News