Economists and experts alike have been left surprised at the UK’s latest economic data which has significantly beaten forecasts.
The latest data implies that the ongoing lockdown hasn’t been as harsh on the economy as predicted, leaving Britain in a prime position to climb back up international monetary performance tables, the Financial Times reported.
“The longer consumers and firms have experienced lockdown conditions, the better they have adapted and found ways to keep activity closer to normal levels” Oxford Economics chief economist Andrew Goodwin said.
The data, which covers the period of lockdown starting January 4 found the UK performed much better compared to the first lockdown in March last year.
This implies that businesses have been much quicker to adapt to changing lockdown restrictions, giving hope to economists.
Economists from Oxford Economics, Barclays and financial services group ING currently expect the economy to shrink anywhere between 2 and 2.5 per cent.
HSBC, Pantheon Macroeconomics join the above in their optimistic expectations, forecasting a decline of less than 1.9 per cent.
However Bank of England’s (BofE) predictions were slightly less hopeful, predicting a shrink of 4.2 per cent in the first quarter compared to the last three months.
A member of the BoE’s monetary policy committee Michael Saunders said: “Data so far suggest that first-quarter gross domestic product will be less weak than expected in the February monetary policy report.”
A key finding of the data shows that the UK’s unemployment figures are much lower than were initially expected.
Tax revenues also showed surprising resilience leaving the Office for Budget Responsibility admitting that borrowing “looks set to undershoot our latest estimate” in 2020-21.
Mortgage approvals have also surprisingly maintained close the decade high levels to pre-Covid in January.
Data shows that a lot of Europe has performed slightly better than expected, with Spain’s stagnation slowing against expectations and France showing similar results however the UK’s economy has outperformed the former.