MacroscopeBritish economic recovery looks good on paper, but serious problems are piling up

Name: England lifts Covid-19 restrictions as infections surge
Uploaded: 2021-09-06T17:30:20.000Z
Duration: 2 min 34 s
Description: England lifts Covid-19 restrictions as infections surge

Confidence is high, employment conditions are bouncing back and retail spending is rebounding. But scratch the surface and it’s a different story

The government has no long-term industrial strategy. Instead, British industry is effectively up for sale to bridge the country’s burgeoning current account gap

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Broadway Market in London on July 16. British consumer confidence is bouncing back from the depths of Covid-19 despair, but the government’s financial position remains precarious. Photo: Bloomberg

David Brown

Published: 1:30am, 7 Sep 2021Updated: 2:33am, 7 Sep 2021

If the busy traffic outside our home is anything to go by (and we live in a quiet country lane), then British recovery sceptics might have got it badly wrong and Britain’s economy is bouncing back with a vengeance.

Economy watchers sometimes look at unusual signs such as traffic flows and shipping movements for clues to economic activity. So the rapid pace building up on the roads and in ports is challenging fears that the economy might implode after Brexit.

Business confidence has gone through the roof, downbeat Britons are suddenly spending like there’s no tomorrow, and the Organisation for Economic Cooperation and Development thinks British growth might even hit 7.2 per cent this year after the carnage inflicted by the Covid-19 crisis.

Hopes are high that Britain has turned the corner and there may be a better life outside Europe. Yet, life is never that simple and a reality check may be looming. The high life may be back but is Britain back to its bad old ways and living beyond its means?

Right now, Britain seems to be enjoying the moment. As the economy reopens for business and people return to work after lockdowns, furloughs and factory shutdowns, economic confidence is buzzing again, employment conditions are bouncing back and output levels are returning to normal.

02:34

England lifts Covid-19 restrictions as infections surge

There are still problems, but recent Covid-19 outbreaks and supply chain issues are not making much of a dent in recovery expectations. The latest purchasing managers’ index (PMI) for British manufacturing from IHS Markit and the Chartered Institute of Procurement and Supply (CIPS) shows business activity doing extremely well, at 60.3 in August, not that far off May’s record high of 65.6.