The Bank of England has predicted that the economy will “recover rapidly” this year – as it left interest rates on hold at 0.1%.
Latest forecasts from the Bank suggest that after taking a steep downturn during the current period of lockdowns, the roll-out of vaccines and scaling back of restrictions will boost growth for the rest of 2021.
The Bank’s quarterly monetary policy report suggests the economy shrank by 10% in 2020 – a slight upgrade on the previous prediction of an 11% contraction.
However it also downgrades the forecast for the growth over the course of 2021 to 5%, from a previous 7.25%.
The Bank sees the current first quarter of this year being worse than it had previously predicted, with GDP growing by 4%, but a sunnier outlook after that.
“GDP is projected to recover rapidly towards pre-COVID levels over 2021, as the vaccination programme is assumed to lead to an easing of Covid-related restrictions and people’s health concerns,” the report said.