NEW! Our Hero’s Journey tool can help you with your next step towards financial freedom - click here to try now.
Advertiser Disclosure

Is the UK economy out of the woods?

Is the UK economy out of the woods?
Image source: Getty Images


After the shocks of the Covid-19 pandemic and Brexit, is the UK economy coming out of the woods? Kalkine Media seems to think we are starting to see the green shoots of revival. But what factors will drive economic recovery? And how certain is it that the UK is on the up?

Let’s take a look.

Plot your path towards financial freedom with our Hero’s Journey tool!

MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.

This tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.

Green shoots of revival?

It is safe to say that 2020 was a tough year for the UK economy. The shadow of Brexit was always going to cause issues. But the arrival of the coronavirus pandemic meant that the UK economy shrank by 9.9% in 2020 – its biggest annual decline in 300 years.

However, moving into 2021 we are starting to see some positive signs. According to equity research and media firm Kalkine Media, unemployment rates have fallen for two straight months and retail sales picked up in March.

Private sector growth is at an eight-year high and February saw a partial recovery in EU exports. All in all, positive economic growth signs are starting to appear.

Months of successive lockdowns have led to pent-up demand. Just think of all those shoppers that queued up early in the morning for the reopening of Primark. People want to start spending their money. And with shops and restaurants reopening, economists are predicting increased footfall in shopping hubs and on the high street.

What does the future hold for the UK economy?

The recent positive economic momentum has led Goldman Sachs to predict that the UK economy will grow by 7.8% in 2021. This is higher than the prediction for the US, where the economy is currently forecast to grow by 7.2%.

However, as we have learnt along the way, nothing is predictable when it comes to the coronavirus pandemic. The UK’s future economic growth is largely dependent on the country’s current vaccination drive.

As Kalkine Media commented, “going forward, a successful and universal vaccination drive would help the NHS in preventing a third wave, expected in late summer”.

While we may expect a summer of fun to provide a boost for the UK economy, a repeat of what happened last Autumn is on everyone’s minds. A successful vaccination programme is key to large parts of the economy being able to open up again – and stay open.

Meanwhile, having the majority of the population vaccinated will help remove some of the uncertainty. Businesses can start to make decisions again, such as hiring new workers.

While there will be some impact felt as government support programmes like furlough and the stamp duty holiday come to an end, there is hope that with enough positive momentum this won’t feel like a cliff edge.

4 iron-clad rules for saving money on everything

Our Editor Sam Robson has been on a personal cost-cutting mission for years – and it’s time to share his wisdom.

Check out his choicest saving tips and tricks in this free report, “Sam’s 4 Iron-Clad Rules For Saving Money On Everything”.

Just enter your email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

How does this impact you?

It is sometimes hard to see how the UK economy as a whole can affect your personal finances.

An increase in consumer confidence and a reduction in the rate of unemployment is a good thing. Positive feelings about the economy have a knock-on effect. It means that the stock market is less volatile, so investments and pensions are more likely to grow.

If conditions continue to improve, then lenders may loosen their lending criteria. In 2020, we saw the number of 0% deals on credit cards significantly reduce. But if the economy recovers, providers may feel more confident and therefore offer more competitive rates and promotions.

However, everyone’s personal finances are different. If you want to keep control of your finances, budgeting is a useful tool. Also, using comparison sites to find the best deal for your circumstances can make a big difference. If you are looking for savings, investment platforms or credit cards, we provide in-depth reviews on the products we think are some of the best around.

Was this article helpful?
YesNo

Reviewed and rated 4 stars out of 5 by MyWalletHero

Need a financial adviser? Get a free initial review lasting up to 1 hour, plus £50 off any follow-up advice.

MyWalletHero has sourced you a £50 discount off the cost of advice when you find an independent or whole-of-market financial adviser through Unbiased.co.uk*. All advisers are FCA-regulated, qualified and give fully unbiased advice. To find yourself an adviser fast and for free – use the Unbiased matching tool.

*This is an offer from one of our affiliate partners. For more information on why and how we work with partners, click here.


Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.