Covid hole in economy ‘is much smaller than feared’

THE economy fared much better than expected during the November lockdown, triggering predictions that a ‘vigorous rebound’ is on the cards.

Output, or gross domestic product, contracted by 2.6 per cent in November, the Office for National Statistics said.

This would still be a large fall during normal times, but is much smaller than the predictions of 5 per cent.

And while it was the first time the economy had shrunk since April in the depths of the first lockdown, November’s decline was a fraction of the 18.8 per cent slump recorded that month. At the end of November, the economy was 8.5 per cent smaller than its pre-virus size. Ruth Gregory, an economist at consultancy Capital Economics, said the ‘Covid-19 economic hole’ is now ‘far smaller’ than anticipated.

She said GDP could return to its pre-virus as soon as the first quarter of 2022, and that even late this year is ‘plausible’.

Dean Turner, an economist at the wealth management arm of banking giant UBS, said that businesses were now more resilient to lockdowns, adding: ‘We remain confident that pentup demand will drive a vigorous rebound as restrictions are eased, most likely from the second quarter onwards.’

FAR too often during the pandemic the Government has resembled a rabbit trapped in the headlights.

From the PPE shambles to the NHS Test and Trace fiasco, ministers have frequently been unequal to the colossal challenge.

Indeed, the script became depressingly metronomic: Fail to foresee a problem, do nothing to stop it – and only take action once it has escalated out of control.

With a horrendous death toll and economic collapse Britain was, sneered No10’s enemies, the runt of the global litter. But since then, there has been a remarkable turnaround. From trailing the field, the UK now leads the world in the Covid fight. We are – whisper it – poised to be the first major nation to return to normality.

For this, we can thank Boris Johnson’s buccaneering optimism. He bet the farm on the development of a vaccine and his numbers have come in. Meanwhile, the immunisation rollout has – touch wood! – been free of all but minor hiccups.

Liberated from the sclerotic EU, Britain has given almost 3.3million jabs, including an astonishing 316,694 on Thursday.

With a fair wind, all over-70s, health workers and the clinically vulnerable will be inoculated by mid-February – a target many critics mocked as unattainable.

Has Mr Johnson received divine intervention? Perhaps not. But even Lichfield Cathedral has been transformed into a makeshift vaccination centre.

Of course, we are not yet out of the woods. As Robert Hardman’s harrowing dispatch lays bare, hospitals on the Covid frontline are at bursting point with sick patients.

And the virus is tearing through care homes again. Ministers promised our elderly would be at the front of the queue for lifesaving jabs. They must not be betrayed.

Yet thanks to the iron discipline of the British public during lockdown, infections are tumbling, even in the teeth of the new super-contagious strain.

Still, the road is long. We must remain vigilant. The virus could spring back.

But if progress continues, curbs will soon ease. We will at last hug loved ones, reopen businesses and send children back to school. With luck and fortitude, that golden day is not far off. As Mr Johnson declared yesterday: ‘Jab by jab, we will win.’