Britain's economy is rebounding rapidly, according to economists, as early data points to a boom in spending after reopening.
German investment bank Deutsche Bank (DB) this week said the UK economy was off to a "roaring start", while analysts at Barclay's (BARC.L) said early indicators suggested a "sharp uptick in activity" after shops, outdoor restaurants, beer gardens and leisure facilities such as gyms reopened on 12 April.
Private sector forecasts of UK GDP compiled by the Treasury show a big leap in expectations among economists. New data published on Wednesday showed the average forecast for UK growth in 2021 is now 5.7% — a huge improvement from the average forecast of 4.8% just a month before.
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"It's clear that we're in for a strong Q2 bounce," Deutsche Bank's chief UK economist Sanjay Raja said this week. "High-frequency data has shot up since the UK entered the second stage of its lock-down exit."
High frequency data allows economist to track more timely data that measures economic activity in close to real time. It is any kind of figures that are available more frequently than monthly numbers and typically includes things like credit card spending data and restaurant and hotel bookings.
Despite indoor restaurant services remaining shut, there has been a surge in restaurant bookings since outdoor dining was reintroduced. Bookings across the country rose 105% last weekend, according to TheFork, and London bookings were 220% above the ‘Super Saturday’ weekend of 4 and 5 July last year when the hospitality sector re-opened after the first lockdown.
Visits to shopping malls, major train stations and city centres have also rebounded sharply. Mobility levels have already risen back to highs seen last summer. Mobility is expected to keep rising as the country heads towards normality.
Deutsche Bank's Raja said he expected UK GDP to rocket 5% in the second quarter.
"If high-frequency data continue to maintain momentum, this could result even in some upside risks to our Q2 projection," he said.
While most economists are bullish, some are urging caution. Pantheon Macroeconomics said the highly unusual nature of the pandemic could distort high frequency data.
Last year COVID-19 forced most people to book restaurants ahead time when the economy reopened, rather than just walk in as was the norm before the pandemic. As a result, data from restaurant bookings website Opentable "greatly overstated" the strength of the recovery in spending when restaurants reopened in 2020, Pantheon said.
Google (GOOG) searches for the terms "pub" in the week to 11 April — a day before they reopened — were 20% below the same days of 2019, Pantheon said. Similarly, searches including "restaurant" were down 45% and those including "gym" returned to usual seasonal levels.
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