UK economy to rise at fastest rate since 1949, says Bank of England

The UK economy is expected to rise by 7.25% this year, the fastest rate since 1949, the said.

The GDP will be supported by government initiatives to keep workers and businesses afloat and limit job losses, with the unemployment rate peaking at 5.4% in the third quarter, compared to 7.8% expected previously.

However, this record-beating growth comes after another record-beating drop, as the economy shrank by nearly 10% last year, the sharpest fall in 300 years.

The pound was down 0.1% to US$1.3893 in the afternoon, with the Bank leaving its monetary policy largely unchanged.

It is still slowing the rate of government bond purchases, though they will still hit £875bn.

“An impressive rebound in the services sector, following the advances in manufacturing output in April are fresh brush strokes painting a picture of recovery and the economy is expected to show a growth spurt in the second quarter, but faint clouds are still etched in the background,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The Bank says the outlook is still uncertain and will depend on how the pandemic evolves and how financial markets and households respond. It may be the fastest pace of growth since World War II but it shows the deep pain the pandemic has wreaked on the economy, with scars expected to linger in the worst-hit sectors.”