UK growth to get shot in the arm from ‘game changing’ vaccine
Article summary
Forecasters predict GDP could return to pre-virus levels by next summer as Bank of England says vaccine could be game changer By Tom Rees and Tim Wallace 9 November 2020 • 7:17pm The vaccine breakthrough has been hailed as a “game changer” for the UK economy, with growth in 2021 set to surge as Covid restrictions are rolled back. The Centre for Economics and Business Research (CEBR) said GDP growth could reach double digits next year as the huge collapse in output suffered during the pandemic is reversed and people meet up, travel and shop as normal. […] A vaccine could make the biggest difference to the economic outlook in the UK, relative to its peers in G10,” said Robin Winkler, analyst at Deutsche Bank. […] “We could have double digit growth next year. It depends how much gets shoved into the tail end of this year.” Forecasters had warned that Covid restrictions could only be rolled back quickly if the vaccine’s efficacy – how effective it is in reducing infection in an inoculated group compared to an unvaccinated one – was high enough. A high efficacy rate allows economies to reopen more rapidly as herd immunity can be achieved sooner. Interim analysis indicates that Pfizer’s candidate is more than 90pc effective, meaning it would protect nine in 10 of those vaccinated. That is well above the minimum 50pc efficacy rate recommended by the World Health Organisation and far better than many analysts were expecting. Economic Intelligence newsletter SUBSCRIBER (article) Health experts praised the breakthrough but cautioned that the economy’s return to normal could still take some time. Adam Barker, a healthcare analyst at Shore Capital, said: “A vaccine approval doesn’t instantly return things to normal, but it’s undeniably a major weapon in the armoury. “Restrictions won’t be lifted immediately as the vaccine is rolled out and perhaps not for some time as the ‘on market’ performance of the vaccine is monitored.” He also warned that “there are plenty of complexities that remain” for vaccinating populations, such as manufacturing, supply and distribution issues. Paul Dales, of Capital Economics, said that there is still much uncertainty about the rollout but added that the recovery would be accelerated by a vaccine. He said: “The shape of the recovery as it stands at the moment without the vaccine is a pretty depressing one.” Mr Dales added the breakthrough could persuade the Chancellor to spend “more money sooner” to save jobs and businesses as an end to his huge fiscal support is in sight.
