The gradual easing of lockdown restrictions is set to trigger a major spike in consumer spending, which is likely to help jump-start the British economy in the run up to the summer. A report published this week by Deloitte found that despite the UK’s widespread adoption of online shopping, the number-one priority for most leisure-seekers right now is “going to a shop”.
Meanwhile, research from the EY Item Club suggests that the UK economy will experience its fastest growth since contemporary records began over the course of this year, having “proven to be more resilient than seemed possible” in the wake of the COVID-19 crisis.
EY Item Club recently adjusted its economic growth forecast for 2021 from 5% to 6.8%, suggesting the fastest growth ever officially recorded by the Office for National Statistics.
A Return of Consumer Confidence
GDP plummeted by an all-time record of 9.9% last year, with economic activity having ground to a halt for the vast majority of consumers, businesses and government offices. Following the worst year on record (according to ONS figures), analysts now believe that the economy will bounce back to pre-COVID levels before the end of Q2, three months earlier than expected.
Despite the economic uncertainty that has plagued almost every UK household throughout the pandemic, research from Deloitte suggests that consumer confidence is growing at its fastest rate in over a decade. A survey conducted on 3,000 adults last month found that at least 60% of adults planned trips to shops as soon as the lockdown restrictions eased.
“The UK is primed for a sharp snap back in consumer activity,” said Ian Stewart, chief economist at Deloitte.
“High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months.”
Unemployment forecasts for the year were also significantly stepped down by EY Item Club’s economists – the previous 7% prediction was revised down to a new 5.8% by the end of the year.
“While restrictions have caused disruption, lessons learned over the last 12 months have helped minimise the economic impact,” commented EY’s chief economic adviser, Howard Archer.
He went on to predict that the UK economy will “emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond.”
Shoppers Hit the High Street
Non-essential retail establishments were permitted to welcome customers once again from April 12 in England and Wales. Scotland’s High Street was back in business as of April 26, while shoppers in Northern Ireland were able to visit stores once again as of April 30.