United Kingdom Economic Forecast

UK Economic Forecast

September 28, 2021

After the economy rebounded healthily in Q2, momentum appears to have slowed in Q3, despite the removal of virtually all Covid-19 restrictions from July. GDP growth eased to a six-month low in July amid flatlining output in the services sector, while retail sales volumes fell in July and August in a sign of weaker consumer spending amid slumping sentiment. Moreover, PMI readings for both the manufacturing and services sectors continued their downward trend through Q3, each hitting seven-month lows in September as a result of self-isolation rules, spiking energy prices, global supply chain tensions and the impact of Brexit on the stock of EU workers. More positively, however, the labor market has continued to strengthen, with August seeing a solid increase in employment and record job vacancies.

United Kingdom Economic Growth

The economy will rebound strongly this year, before growth moderates somewhat in 2022. A sharp decrease in public spending growth will drive the slowdown, offsetting a pickup in consumer and capital spending. New Covid-19 variants, supply constraints, tense relations with the EU and disruption as the UK adapts to its new trade agreement with the bloc pose downside risks. FocusEconomics panelists expect the economy to expand 6.6% in 2021 and 5.4% in 2022, which is down 0.1 percentage points from last month’s forecast.

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United Kingdom Facts

Value Change Date
Bond Yield0.83-3.04 %Jan 01
Exchange Rate1.33-0.35 %Jan 01

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