Rapid deployment of the Covid-19 vaccine in the UK’s four countries pushed GDP up 2.1% in March, helping to avoid a sharp drop in the first three months of the year, figures show official.
The economy shrank 1.5% better than expected in the first quarter of 2021, as the success of the vaccination program allowed the government to begin easing restrictions as businesses adjusted to constraints at a faster pace. quick than expected.
City economists were expecting a 1.7% contraction – earlier in the year there were concerns that the second wave of the virus in 2020 and a third lockdown would hit the economy harder and plunge the Kingdom – United in a full-blown recession.
School closures and a sharp drop in retail sales have been blamed by the Office of National Statistics for much of the contraction in the economy. Growth returned across all major sectors of the economy in March with the easing of Covid restrictions, at a rate not seen since August 2020.
The service sector, which accounts for around three-quarters of activity, fell by 2%, mainly due to the closure of the hospitality and leisure sector.
The manufacturing sector, which has been hit by a drop in demand due to Brexit and the lockdown, has maintained much of the momentum it gained in the second half of last year, after declining by just 0.7% in the first quarter.
The construction sector, which accounts for about 6% of economic activity, advanced 2.6% in the quarter.
Last week, the Bank of England raised its forecast for GDP growth in 2021 to 7.25%, which would propel the economy to its fastest annual growth since World War II.
The central bank’s bullish outlook, mainly based on the faster-than-expected rollout of vaccines, also predicted unemployment to peak at less than 5.5% in the third quarter of this year and business investment to rebound strongly.
Several countries have released first GDP estimates for the first quarter of the year, including the United States, Germany, France, Italy and Spain. Real GDP is estimated to have grown 1.6% in the United States and 0.4% in France, while there were contractions in Germany, Spain and Italy, the ONS said.
Dean Turner, Economist at UBS Global Wealth Management, said: “There is cause for optimism as today’s figures confirm that the UK economy has withstood the restrictions of the first quarter much better than expected. initially feared.
“In addition, the rebound in activity seen in March, which was the strongest monthly impression of GDP since August 2020, provides an encouraging backdrop for the second quarter.”
Chancellor Rishi Sunak said: “Despite a difficult start to the year, economic growth in March is a promising sign of things to come. As we cautiously reopen the economy, I will continue to take all necessary steps to support our recovery. “