Vaccine ‘will lead to rapid bounce back’

ECONOMISTS believe the UK could see the fastest recovery since World War II if a successful Covid-19 vaccine is rolled out in the coming months.

It follows warnings that output may not see pre-pandemic levels until 2023 due to the impact of lockdowns.

News of Pfizer’s apparent achievement in developing a 90 per cent effective jab has boosted stock markets around the world, and raised hopes the potential end of restrictions next year will trigger a boom in spending and employment.

Some economists predict output could return to pre-Covid levels by early 2022 – a year earlier than previously forecast.

The FTSE-100 had its best day since March, growing by £70billion and closing up 4.7 per cent on Monday when the vaccine news was announced, and markets continued to soar yesterday.

Simon French, of investment bank Panmure Gordon, told Metro: ‘Economic activity from consumers may go back to normal early in 2021 but there will be a scarring effect. Businesses will not be able to invest or employ staff on the same scale as before, while they recover and pay off their debts.

‘So it will take some time and a recovery by 2022 is still an optimistic forecast. It takes about three years after a recession for an economy to recover on average – so if this was achieved it would be the fastest economic recovery since World War II.’

Even if Britain leaves the EU without a deal it would have a ‘marginal’ impact on the economy in the short-term compared with the virus, he added.

Douglas McWilliams, of the Centre for Economics and Business Research, was even more optimistic and said GDP could get back to 2019 levels by ‘as early as mid-2021’. He tweeted: ‘This would give a GDP growth rate next year that might be double digit or close to that.’

Last week, the Bank of England said the economy would not return to its preCovid size until the first quarter of 2022.