UK economy predicted to return to pre-Covid levels by middle of 2022

4 March 2021

The UK economy is forecast to return to pre-Covid levels by the middle of 2022, with growth of 7.3% next year, according to UK chancellor Rishi Sunak.

The chancellor also forecast an economic rebound this year, with predicted annual growth of 4%.

But the stark impact of the impact of the pandemic includes a 10% shrinking of the economy in 2020 and 700,000 job losses since the start of the pandemic – with unemployment set to peak at 6.5% in 2022.

The government’s Furlough scheme is being extended to the end of September, with employers being asked to contribute 10% in July and 20% in August and September.

The Builders Merchant Federation (BMF) said the Budget “largely struck the right notes in continued support for business”.

John Newcomb, CEO of the Builders Merchants Federation, praised the chancellor for supporting small businesses via the Furlough scheme and business rate discounts.

“Similar extensions to self-employment grants will help small builders and other trades who form the main merchant customer base and ensure they are still in business to service the needs of homeowners helped by the new government-backed mortgage guarantee scheme and the extension of the Stamp Duty Holiday,” he said.

He also welcomed the announcement of a new UK Infrastructure Bank as a sign of the chancellor looking to the construction industry to help drive economic recovery.

The Bank in Leeds will have £12bn in capital, with the aim of funding £40bn worth of public and private projects.

Mr Newcomb did however express disappointment at the lack of a National Retrofit Strategy.

“This would not only upgrade the country’s housing stock to the highest levels of energy efficiency, but would also provide a platform to upskill the building trade with skills required both to retrofit existing homes and build low carbon new homes, helping to achieve the Government’s Net Zero ambition.”

Other points in the Budget include:

• Stamp duty holiday on house purchases in England and Northern Ireland being extended to June 30

• Tax breaks for firms to "unlock" £20bn worth of business investment

• £5bn in restart grants for shops and other businesses in England forced to close

• Business rates holiday for firms in England to continue until June with 75% discount after that

• Corporation tax on company profits above £250,000 to rise from 19% to 25% in April 2023