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May 2021

Although many of us have been hiding from the weather for much of this unusually cold and rainy month, the economic picture is looking much sunnier. Growth figures suggest that the economy may recover from the Covid-19 pandemic sooner than expected, and optimism is increasing as businesses begin to reopen.

While there are likely to be lingering effects of the recession – and not everyone is going to be able to return to the way things were before – there seems to be a lot to be positive about.

Headline Indicators summary

GDP fell by 1.5% in January-March 2021 compared to the previous three-month period (October-December). This compares to growth of ‑0.6% in the Eurozone in Q1 2021.

Services output was down by 6.1% in the three months to March 2021 compared to the previous year. Manufacturing output fell by 1.5%.

CPI inflation was 1.5% in April 2021, up from 0.7% in March. Inflation in the Eurozone was 1.6% in April, up from 1.3% in March.

The Bank of England’s Monetary Policy Committee (MPC) left interest rates unchanged at 0.1% on 6 May, the lowest they have ever been, following a cut from 0.25% on 19 March 2020.

Average wages excluding bonuses were 4.6% higher in the three months to March 2021 compared with the year before. CPI inflation for this period was 0.6%.

32.48 million people were in employment in January-March 2021, down 529,000 from a year before. The employment rate was 75.2%, down from 76.3% the previous year.

1.62 million people were unemployed in January-March 2021, an increase of 258,000 from the year before. The unemployment rate was 4.8%. The UK harmonised unemployment rate for Q4 2020 was 5.1%, above the rate of Germany (4.6%) but below that of the US (6.8%) and France (8.1%).

Productivity across the whole UK economy rose by 0.8% in Q1 2021 compared with the previous quarter. Compared with the previous year, it was up by 1.0%.

Government borrowing in 2020/21 was £300 billion, £243 billion more than in 2019/20. At the end of April 2021, public sector net debt was equivalent to 98.5% of GDP, up from 87.9% at the end of April 2020.

The UK had a trade deficit of £2.7 billion in the three months to March 2021, compared with an £13.2 billion deficit in the previous three months. The current account deficit was £26.3 billion in Q4 2020 (4.8% of GDP), up from £14.3 billion in Q3 2020 (2.6% of GDP).

The value of sterling fell by 0.4% between March and April, following an increase of 1.3% between February and March. Compared with a year ago, it is 4.2% higher.

The volume of retail sales increased by 2.6% in the three months to April 2021 compared with the previous three months, and increased by 12.8% compared with the previous year.

House prices increased by 10.2% in the year to March 2021.

Household debt stood at 129.5% of disposable income in Q4 2020. It has been around this level since mid-2017.


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