Britain’s economy is on course to grow much more quickly in 2021 than predicted earlier this year, finance minister Rishi Sunak has said as he began a budget speech, potentially paving the way for higher spending by the government.
Sunak, announcing forecasts drawn up by the Office for Budgetary Responsibility (OBR), said the economy was likely to grow by 6.5 per cent in 2021, faster than a forecast of 4.0 per cent made in March when Britain was still under a coronavirus lockdown.
Since then, the country has moved ahead with its COVID-19 vaccination program and lifted restrictions on the economy.
“Today’s budget does not draw a line under COVID. We have challenging months ahead.” Sunak said in a speech to parliament. “But today’s budget does begin the work of preparing for a new economy post-COVID.”
The forecast was close to the International Monetary Fund’s estimate that British gross domestic product will grow by 6.8 per cent in 2021, the fastest among Group of Seven nations after the country suffered the sharpest GDP fall in the G7 in 2020.
The OBR forecast that gross domestic product would grow by 6.0 per cent, 2.1 per cent and 1.3 per cent in 2022, 2023 and 2024, Sunak said.
In March, the OBR had forecast growth of 7.3 per cent, 1.7 per cent and 1.6 per cent over the next three years.
The economy was expected to regain its pre-pandemic size at the turn of the year, compared with the forecast made in March of the second quarter of next year.
Sunak also said the OBR had reduced its forecast for “scarring” of the economy to 2 per cent from a previous estimate of 3 per cent.