BlackRock Investment Institute

Macro insights

Tracking the UK's restart

The UK’s rapid progress with the Covid-19 vaccine rollout should propel its 2021 restart – with output returning to pre-Covid levels later this year, in our estimates. Yet key service sectors remain vulnerable and will also have to adjust to structural changes brought on by Brexit. Policy support to prevent permanent scarring will be key.

Eyeing the restart
Real GDP and projections, 2020-2023

Chart GDP rebounding to above pre-covid levels in 2022

Sources: BlackRock Investment Institute, with data from Refinitiv Datastream and Haver Analytics, February 2021. Notes: The solid lines show the path of real GDP, indexed to 100 as of the fourth quarter of 2019 – the last full quarter pre-Covid 19. The dotted lines show our projected GDP paths based on our estimates of restriction measures in coming quarters their potential impact on activity.

The hit to services – which make up 80% of UK GDP – partly explains the larger initial hit to the UK. Contact-intensive services especially saw steep declines in output. Renewed lockdown measures have reversed some of the progress made when the economy opened up briefly last year. We still see the cumulative loss in UK GDP over time to be just under 25% of pre-shock levels – compared to a 43% loss in the wake of the global financial crisis. Underpinning this estimate is the outlook for the virus dynamics that shapes the pace at which economies can reopen – coupled with the speed at which pent-up demand can be unleashed. On this score, the UK is rolling out vaccines at a much faster pace than other large developed economies.

Recent macro insights

Manufacturers to slow production
Manufacturers have slowed production substantially in both the U.S. and the euro area, according to survey data.
Financial conditions tightening fast
U.S. financial conditions have tightened a lot since the start of the year – in other words, financing is becoming more costly for individuals and companies. Since then, th...
Less optimism on growth
Economic growth forecasts for this year and the next are coming down rapidly. The OECD last week followed the World Bank in downgrading growth forecasts.

Stay ahead of markets with the latest insights from the BlackRock Investment Institute.

Please try again
First Name *
Please enter a valid first name
Last Name *
Please enter a valid last name
Email *
Please enter a valid email
Investor type *
This field is mandatory
Country *
This field is mandatory
Company *
This field is mandatory
Thank you
Thank you for your subscription!
We usually publish weekly insights on every Monday. Expect to receive your first newsletter from us this upcoming Monday.