LONDON (dpa-AFX) - The UK economy is set for a good run this year unless concerns surrounding the new coronavirus variant found in India start to reverse the rebound in consumer and business confidence, ING said.
Growth prospects look good this year and the economy is forecast to grow just-shy of 7 percent, ING economist James Smith said Friday. This includes a 5 percent growth in the second quarter.
'It's worth noting that this latter figure is mainly a function of the April/May reopenings, and we don't think a delay to the final lifting of restrictions in June necessarily needs to make a significant impact on near-term GDP,' Smith said.
Citing the preliminary results of the PMI surveys, the economist said hiring is bouncing back quickly, especially in the catering/hospitality sector, which continues to struggle to meet staff requirements due to a sharp fall in the number of EU workers in the UK.
Survey results gave clear evidence that cost pressures are rising. However, Smith expects inflation to trend lower by this time next year, thus removing the immediate pressure on the Bank of England policymakers to consider rate hikes.
Further, global demand recovery is helping to offset Brexit disruption for manufacturers. Exports orders grew at a record pace, but UK trade is yet to fully bounce back to its pre-trade deal levels, the economist added.
Copyright RTT News/dpa-AFX
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