The EY Item Club has set its forecast for the UK economy to 6.8%, which is up from 5% earlier this year, predicting what would be the fastest growth rate in almost fifty years.
The UK’s Economic Recovery
Of course, any UK growth for a while will be part of the larger scale recovery of the colossal 9.9% wiped off the country’s GDP last year by the effect of the pandemic.
We’ve already seen how fast the stock markets both in the UK and around the world have recovered, and according to the Item Club, the UK is expected to achieve full economic recovery by Q2 next year, which exceeds previous forecasts by an entire quarter.
Speaking on behalf of the EY, Howard Archer stated that the economy proved “more resilient than seemed possible” and believed the UK would “emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond.”
Economists Call For Caution
However, the Wall Street Journal pointed out the day before this news that many economists call for caution as the rapid rises across all areas of the global economy show signs that we are in a bubble.
Jeremy Grantham, who correctly predicted the dot-com bubble in 2000, among others, said we’re in a bubble unlike any other.
He said, “All of the previous bubbles occurred when economic conditions looked nearly perfect. This has been quite different because the market started its incredible surge in a rather wounded economy.”
With rapid gains seen on markets from Bitcoin to lumber, compounded with the high volatility created by “meme stocks”, it’s clear where the fears stem from.
The opportunities for short term and day trading here are obvious, with potential volatility in both directions in the UK market and GBP Forex. If, however, Mr Grantham is to be believed, it could still be a very long time before the bubble bursts.
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