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Gloucestershire Business News

HSBC economic head predicts better times on the horizon

The UK economy is saying good riddance to the dark months at the height of the pandemic and showing signs of lift-off, according to the head of economics at HSBC UK.

Mark Berrisford-Smith was talking at a Building Back Better webinar hosted by Business West.

He said: "Things are very definitely on the mend - at least here in the UK. There is a global recovery that remains on track."

The rollout of the coronavirus vaccines is key to the continued growth from a difficult year which saw the UK suffer more than most countries.

"There are not many countries that reported nine and 10 per cent falls in their GDP last year," he said.

"This year, the news is now much, much better and that is all down to the vaccine rollout which is something we do seem to have got right.

"Our official forecast is for five per cent growth, but given what has happened in the first quarter I think we could well nudge that figure a little bit higher."

He estimated there is a "pent-up avalanche of demand" from money which has not been spent in the last year which could reach $3trillion globally.

"We are at the start of this lift-off process," he said. "The latest figures we have are for February and there was a modicum of growth after what was largely a downturn in January.

"In effect, February output was about flat if you take the Brexit effect out of that.

"We will see more of a revival in March because we have the schools opened, and then the figures will really start to take off in April we will get those figures in June."

He predicted that GDP for the first quarter of this year will not be down a lot - perhaps only 1.5-2 per cent.

"This is the remarkable thing," he said. "We have gone through a quarter with everybody shutting their houses and most of the places we like to go out to closed and our GDP will have fallen by less than two per cent."

He believes that we will get back to pre-pandemic levels of growth by the first half of next year.

"That is a lot faster than I would have told you a year ago," he said. "I would have thought end of 2022 - possibly more likely the first few months of 2023 to get back to pre-pandemic.

"What has caused the difference is that we got through the winter despite it being so bad in terms of the pandemic with such a small fall in our GDP.

"It's the unleashing of that pent-up demand from consumers which is going to drive the recovery, and the government's measures to prompt businesses to invest which will stoke growth even faster as we go through this year and next."

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