This info-graphic titled ‘Post COVID UK-Economic Predictions for 2021’ provides us an overview of impact of Covid-19 up on businesses post 2020. Possible dislodging of inflation expectations and a hefty demand-side recovery are the main upside risks to inflation. The contemporary economic outlook appears to merit the tapering or even ending of the Asset Purchase Facility acquisitions already scheduled to take place next year. Nevertheless, the lack of preparation and clear communication about the speed and effect of ending quantifiable easing means that doing so risks a destabilizing reaction from fiscal markets. The Monetary Policy Committee’s future communications around tapering and policy rate normalization will be crucial in bringing the current QE expansion to an law-abiding close.
The combination of a Free Trade Agreement Brexit and Covid-19 has imparted to a forecast level of UK GDP around 3 per cent lower in the medium term than implied by the post-GFC trend. There still exists the anticipation that this could be worse if downside risks materialize. For more information, please refer to the info-graphic below.
