Goldman Sachs has upgraded its forecasts for the U.K. economy in 2021, and now sees it outpacing the U.S. The U.K.‘s flash composite purchasing managers’ index reading for April surged to 60 from 56.4 in March, its highest level since November 2013 and a far sharper incline than anticipated, as the country embarks on a phased exit from nationwide lockdown measures. Retail sales also vastly outstripped expectations in March to climb 5.4% from the previous month, while a GfK survey showed British consumer sentiment this month rising to its highest point since the pandemic.
Almost 33.7 million people have now received their first vaccine dose in the U.K., with daily Covid-19 cases falling steadily to 1,712 on Sunday. Monthly GDP in the U.K. increased 0.4% in February, roughly in line with expectations, but following recent upward revisions to real GDP and last week’s strong indicators, Goldman Sachs has now upped its growth forecast to a “striking” 7.8% for the whole of 2021. In February, the Wall Street titan upped its forecasts for U.S. growth in 2021 to 6.8%, while the International Monetary Fund currently projects 6.4% growth in the U.S. and 5.3% in the U.K.
The U.K. economy shrank by 9.9% in 2020, according to the Office for National Statistics, its largest annual contraction since the Great Frost of 1709 as the country was forced into strict lockdown measures for longer periods than many of its European peers. U.S. GDP shrank 3.5% in 2020, the largest decline since 1946, when the U.S. demobilized after World War II.