London (dpa) – The British Statistics Office is announcing impressive figures: the economy in the United Kingdom grew by 7.5 percent in 2021, more strongly than in 80 years.
The Treasury proudly tweeted a chart showing Britain’s economic power over the past year compared to the other G7 countries. Although the conservative government reintroduced corona rules in winter due to the spread of the omicron variant, the economy also grew by 1 percent in the final quarter.
However, experts point out that this is primarily a recovery: in 2020 the British economy had slumped by 9.4 percent – the sharpest drop since 1921. The government did not respond. “The economy is recovering strongly thanks to the incredible determination of the British people and our great British vaccination effort,” Prime Minister Boris Johnson wrote. And Finance Minister Rishi Sunak, who is considered a possible successor to the Prime Minister, emphasized that the record year was mainly due to the £400 billion Corona aid package.
Johnson sees himself confirmed. He has repeatedly hurled at all critics of his administration and the lockdown parties that it was only thanks to his politics that the British economy came back from the corona pandemic stronger than others. But economists mix a lot of water into the wine. Yes, Great Britain had the strongest growth of G7 members in 2021. But the country also had the clearest minus in 2020.
Looking at the whole pandemic, only Japan underperformed and also in the last quarter of 2021 UK growth was significantly lower than that of most other leading western industrialized countries (G7). The gross domestic product (GDP) was thus still below the level of the fourth quarter of 2019 before the outbreak of the pandemic. Other countries are further along.
“The recovery could be quite short-lived,” said economist Thomas Pugh of management consultancy RSM UK. Above all, the rapid inflation threatens to nip the effect in the bud. Pugh expects the inflation rate to rise to around 7 percent in April.
It doesn’t stop there, as Sebastian Mackay from fund manager Investo warned. “British households are in for a triple hit of higher energy prices, higher social security contributions and higher interest rates,” Mackay said. The Bank of England expects real incomes to fall by the most in three decades in 2022. Combined with slowing global growth, that doesn’t bode well for the UK economy.
Trade in goods with the EU has plummeted since Brexit
Especially since Britain cannot rely on trade. Both exports and imports in 2021 were below the 2018 level. In particular, the exchange of goods with the EU has slumped significantly since Brexit and cannot be offset by increased trade with other countries. For the export power Germany, the importance of the British market has decreased significantly, as figures from the Federal Statistical Office show. In the list of the most important trading partners, the kingdom slipped three places to tenth place and is about to be overtaken by the Czech Republic.
The latest growth drivers are also causing frowns in Great Britain. According to the ONS statistical office, higher spending in health and social services was primarily responsible for the surge. This was due to more family doctor visits and more corona tests and vaccinations due to the recent pandemic wave. These drivers are likely to decrease significantly if the pandemic slowly subsides, as expected. On the other hand, consumption should increase again – if consumers still have money to spare.
© dpa-infocom, dpa:220211-99-83866/2
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