The U.K. economy expanded by 2.3% in April, exceeding economists’ rosier expectations, and the European Central Bank on Thursday boosted its growth and inflation forecast for the monetary union both for this year and next.
- The 2.3% jump of U.K. gross domestic product in April was due to the reopening of retail stores and the authorization extended to restaurants and bars to serve meals outdoor, the Office for National Statistics said on Friday. Car sales also grew strongly that month.
- The U.K. economy, however, still remains 3.7% below its pre-COVID-19 pandemic level of February 2020, but it is now 1.5% larger than at its previous post-pandemic peak in October last year.
- The ECB said on Thursday that it was predicting the eurozone economy to grow 4.6% this year and 4.7% in 2022, up significantly compared with its previous March forecast of 4% and 4.1%, respectively. Growth in 2023 is seen at an unchanged 2.1%.
- Both the U.K. and the eurozone economies are now on track to be back at their pre-pandemic levels around mid-2022.
The outlook: Europe, the world’s largest trading power, was bound to benefit from the global recovery as COVID-19 vaccination campaigns progress. But “record” growth is mostly due to the depth of the slump last year, and “exceeding expectations” may simply reflect households’ and businesses’ excessive pessimism in the last few months.