CBI predicts economy will return to pre-Covid levels by end of year

The UK economy is set to return to pre-Covid levels by the end of 2021, a year earlier than expected, a leading business group has predicted.

The CBI said the economy is expected to grow by 8.2% this year and 6.1% in 2022, while the peak in unemployment will be lower than was previously forecast.

But business investment will remain 5% below levels seen before the pandemic struck, said its report.

The economy is poised for “considerable” growth over the coming months despite the delay in ending the lockdown, said the CBI.

Its report pointed to the rapid rollout of vaccines and the “unleashing” of pent-up demand, although the CBI warned that stagnant productivity and business investment remained a problem.

The extension of the Job Retention Scheme into the autumn and expectations of a stronger economic recovery will lead to a lower peak in unemployment, it was predicted.

CBI director general Tony Danker said: “There are really positive signs about the economic recovery ahead this year and next. The data clearly indicates that there is pent-up demand and ambition across many sectors.

“The imperative now must be to seize the moment to channel this investment into the big drivers of long-term UK prosperity.

“That’s why it’s the right time for Government to come forward with far more detailed plans on everything from decarbonisation, to innovation to levelling up.

“Clearly this does not apply to the hardest-hit sectors from the pandemic who even now face continued delays and genuine challenges to stay viable.

“It would be devastating for hospitality, events or aviation businesses to fail on what we hope is the last leg of restrictions.”