Brexit news: UK comes back strong to overtake EU as economist hails ‘positive momentum’ | Politics | News
Julian Jessop took to Twitter after the Office for National Statistics released its latest economic statistics, for November 2021, which revealed GDP grew by 0.9%, while the economy was 0 higher .7% from February 2020. Mr Jessop, who used the data to update his UK GDP forecast said: “UK economic growth in 2021 is expected to be just below 7, 5%, which is 1% more than forecast in the October budget and 3% more than the consensus at the start of last year.
“This means the UK was almost certainly the fastest growing G7 economy in 2021.”
Many were likely to see this as an inevitable minor recovery after the sharp fall in 2020, conceded Mr Jessop, the former chief economist at the Institute of Economic Affairs (IEA).
However, he added: “The UK still did much better than expected, even taking into account this favorable base effect.”
To illustrate his point, Mr Jessop shares a chart comparing what he called “two different vintages” of the Organization for Economic Co-operation and Development’s forecast for the past year.
He said: “In December 2020, the OECD expected the UK to grow by 4.2% in 2021 and be overtaken by France and Italy.
“This turned out to be the biggest forecasting error for any G7 economy.
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“The economy is still much smaller than if it had continued to grow at its pre-Covid trend, and parts of it are still on life support.
“But the UK recovery also ended 2021 with more positive momentum than many of its peers, with GDP up around 1% in the fourth quarter.
“So while UK GDP has returned to pre-Covid levels a bit later than some (notably the US and France), it has a better chance of continuing from here.”
Early estimates for the year 2021, which were also released on Friday, also suggested Germany was now the “G7 laggard”, Mr Jessop said.
He explained: “German GDP fell 0.5% to 1.0% q/q in the fourth quarter and is still below its pre-Covid level, due to supply chain issues, soaring inflation and Omicron restriction.”
For the rest of 2022, Mr Jessop expects UK GDP to be likely to be between 5.5 and 6 per cent.
He said: “Recovery likely stalled again in December and January, due to caution around #Omicron, and rising energy bills and tax hikes will add to the headwinds in 2022.
“But there should also be strong tailwinds, including strength in the #jobs market, further easing of #Brexit uncertainty, a rebound in #business investment and the disappearance of the Covid threat .
“More timely business and consumer surveys are also generally reassuring.”
He concluded: “The UK economy is set to beat expectations again this year.
Clearly, the risks are significant (in both directions) and the government may need to do more to help low-income households in particular.
“But the consensus still looks too pessimistic, just as it was in 2021.”