The UK economy is like a “coiled spring” ready to release large amounts of “pent-up financial energy”, the Bank of England’s chief economist has said.
Andy Haldane said consumer confidence would surge back thanks to the vaccine programme, with the economy firing “on all cylinders” by spring.
He is the latest economist to forecast a sharp rebound in growth after an expected easing of restrictions.
The economy is currently set to shrink 4.2% in the first three months of 2021.
Writing in the Daily Mail, Mr Haldane said: “With 13 million of the most vulnerable people already vaccinated, the risk of death or hospitalisation in the UK has already probably halved.
“By the end of March, based on the current pace of vaccine rollout and government data on vulnerable groups, this risk may have been reduced by as much as three-quarters and by the end of the second quarter it will be even smaller.”
As a result, he said health concerns would fall and restrictions lift, allowing people to return to spending and socialising.
The turn in sentiment was likely to be rapid, he added – “a light-switch being flicked rather than a dimmer-switch being turned”.
“Having been bottled in for a year, most people are desperate to get their lives, including their social lives, back.
“When given the opportunity to do so safely, they will seize it,” he said.
He said shared social experiences – from pubs to sports to cinema – would benefit, as glimpsed last summer during the Eat Out to Help Out scheme.
Strong household finances
And unlike past recessions, he added, many UK households had strengthened their finances during lockdown and would have more money to spend.
“That might mean two pub, cinema or restaurant visits a week rather than one,” he said.
“It might mean a higher-spec TV or car or house.”
On top of this he said a significant number of companies had amassed cash during the crisis, which would likely be invested as restrictions started to ease.
“That would be good news for jobs, helping to recover some of the million lost so far in this crisis,” Mr Haldane wrote.
“And it would be good news for business investment too, helping companies boost their performance and productivity – and, ultimately, the pay of their workers.”
With continued government support added to the mix, he said a strong bounce-back was assured.
“The economy is poised like a coiled spring. As its energies are released, the recovery should be one to remember after a year to forget.”