The UK’s coronavirus (COVID-19) vaccination programme will help the UK economy rebound strongly this year, according to the Bank of England (BoE).
The economy is expected to shrink by 4.2% in the first three months of 2021 as a result of the third national lockdown. However, the BoE’s policymakers expect a rebound in the spring as people become more confident about spending.
The government’s COVID-19 support schemes are expected to limit any immediate increase in unemployment, although the unemployment rate is still projected to rise to 7.8% later this year as the furlough scheme winds down.
The BoE said the rebound in economic activity would depend on controlling any new strains of the virus, as well as households’ willingness to spend.
It believes retired households which have received vaccines sooner will start spending their savings first.
The Bank said: ‘The COVID vaccination programme would be expected to lead to an easing of social distancing restrictions, reduced economic uncertainty and higher activity, although the timing of those effects is hard to predict.’