Private sector economists have joined the Bank of England in predicting a historic year for growth.
Monthly private sector forecasts compiled by the Treasury show a big upgrade in forecasts for the UK economy. Analysts are now predicting the best year for growth since the aftermath of the Second World War.
The average of 23 forecasts made since the start of May shows economists are now predicting GDP growth of 6.5% in 2021, compared to a forecast of 5.7% made last month. It marks the third month in a row that expectations have been upgraded.
The highest forecast comes from Goldman Sachs, which now expects the economy to expand by 8.1% this year. The lowest, from macro forecaster Heteronomics, is 4.9%.
The upgrade to the average private sector forecast comes weeks after the Bank of England said it expected the economy to surge by 7.25% this year. The chief executive of Barclays has said the UK is on track for its strongest annual growth since 1948.
The bullish forecasts come as early signs point to a rapid rebound for the economy as restrictions are eased. Non-essential retail and other parts of the economy such as gyms and nail salons were allowed to open from the middle of last month. Restaurants, bars, cinemas, and theatres were allowed to reopen indoors from this week.
"High-frequency data point to a marked pickup in credit card spending. Mobility levels are up. Use of public transport is also up. And dining reservations have picked up nicely since the opening of outdoor dining," Sanjay Raja, Deutsche Bank's chief UK economist, wrote in a note this week.
"While we still remain some way away from normal, most signs point to an acceleration back to normal."
Despite the historic growth forecasts, the Bank of England has said it expected the UK economy to only be back at pre-pandemic levels by the end of this year. The UK economy suffered one of the steepest GDP collapses of any major economy last year, slumping 9.8% as a result of the COVID-19 pandemic.
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