UK economy to outpace all other G7 nations in 2022

Picture by Pippa Fowles / No 10 Downing Street

The UK’s economy is on course to outpace all other nations in the G7 for the second year running say leading economists.

Goldman Sachs have predicted the UK’s economy will rise by 4.8 percent in 2022 which is more than the 3.5 percent predicted for the US, more than the 4.0 percent predicted for Germany and more than the 4.4 percent forecast for Italy and France.

Similarly, experts at HSBC also expect UK GDP to grow more than the other G7 nations of France, Germany, Italy, Canada, the US and Japan.

HSBC predicts the UK economy will grow by 4.7 percent over the next 12 months which is more than their forecasts for the rest of the G7 nations which range from 2.2 percent for Japan and 4.3 percent for Italy.

The latest forecasts from the International Monetary Fund (IMF) also show the UK economy is set to outperform the EU’s top economies and that of the Eurozone as a whole this year and next.

Britain left the EU at the end of 2020 and has since increased output by almost 7.0 percent after investing heavily in domestic manufacturing and attracting a lot of global investment in various sectors of industry such as energy and car manufacturing.

Oil giant Shell last month announced it will be moving its head office to the UK from the Netherlands and car manufacturing giant Nissan announced its huge Sunderland plant will be at the centre of a £13.2 billion investment, with the hub being used to develop 23 British made electric cars by 2030.

The UK has also signed 97 trade agreements since leaving the EU including lucrative trade deals with countries such as Japan and Australia.

Martin Beck, senior economic adviser to the EY Item Club, a leading economic forecasting group said the British economy will also keep recovering “as activity is supported by very strong household finances from savings, paying down debt and higher house prices, combined with traditional British consumer appetite to spend.”

After GDP fell by close to 10 percent in 2020 (which is more than in a range of similar economies in the pandemic), Mr Beck explained that the UK estimate the output of public services more, rather than only the money spent on them, meaning other nations often understate the scale of their downturns.

Mr Beck said:

“Measurement of public sector output cast the UK in a bad light during lockdowns, but will be a plus as things get back to normal.”

Claus Vistesen at Pantheon Macroeconomics added another reason for Britain’s faster growth is that there is more ground to recover because of the depth of the 2020 recession.

Mr Vistesen told The Daily Telegraph:

“The Eurozone economy is probably going to be hit harder by Omicron because already in the fourth quarter, before Omicron, we saw restrictions in Europe due to the Delta wave.

“So I would say the total hit to output is probably going to be bigger in the Eurozone than the UK.”

He added the UK has also benefitted from a fast vaccine booster programme which could help limit some of the severity of lockdown restrictions and allow the economy to get back on track.

He said:

“The booster programmes take time to roll out. The UK is, like early on [in the pandemic] going very fast, but is still staring down restrictions.

“I don’t think that will be very different in Europe – even as Europe ramps up boosters, which they are, it is not going to prevent restrictions being imposed in the near-term.”

Mr Vistesen said both economies are suffering from high energy prices and global supply chain problems, though some of those are “hitting the eurozone more, including the double dip recession in Germany’s vital car factories.”

However, the leading economist said he expects the UK and eurozone economies to both remain on a fundamentally sound footing, “beyond the threat of more lockdowns.”

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