The ‘New Normal’: Our Economic Outlook
This weekend, the Government started offering all English businesses with over 50 employees’ workplace Covid testing. You can now register to order coronavirus tests for your employees by heading to the government website.
We can now see a picture of the “New Normal” emerging: with faster and more regular covid testing for the workplace, the option for travelling and possibly attending events in the future, and voluntary social distancing and regular vaccinations against the virus and its new strains. In the meantime, let us have hope the vaccination roll out continues to be successful.
The Bank of England monetary policy committee met last week, and voted unanimously to keep interest rates at 0.1% and maintain its current position on government borrowing. They stated that the vaccination programmes underway have improved the economic outlook, however they expect Gross Domestic Product (GDP) to be 4% down for the first quarter of 2021 due to the lockdown.
The good news is that the state GDP is projected to recover rapidly towards pre-covid levels over the year, as the vaccination programme is assumed to lead towards an easing of restrictions. This will however depend on several factors: such as the evolution of the pandemic, the measures taken to protect public health, and how households, businesses and financial markets respond to these developments.
For 2021, we expect government support such as the Furlough scheme to limit any immediate increase in unemployment – however the unemployment rate is still projected to rise to 7.8% later this year as these schemes wind down.
If we focus on the positives, and the vaccination programme continues at a pace, then we should expect many restrictions to be lifted from May 2021 onwards, and hopefully we can have a more normal home and business environment from there on.