UK Economic Outlook July 2021 - pwc.co.uk/economics
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UK Economic
Outlook
July 2021
pwc.co.uk/economics
Contents Key points 1 Recent developments in the UK economy 4 Outlook for the UK economy 11 Performance and outlook of the labour market 25 Current inflation developments and outlook 29
Key points
The latest UK economic data
Despite tighter restrictions, the quarterly hit Data on UK-EU trade in the first four months
1 to UK GDP in Q1 2021 was 18 percentage
points smaller than Q2 2020. The UK economy
3 of the year illustrate the challenges
businesses are facing adapting to new
contracted by 1.5% in Q1 2021, as lockdown trading arrangements, but it is too early to
measures held back activity and spending. draw conclusions. Total UK trade with EU
However, with lockdown restrictions at their countries was 27% lower in the first four months
most stringent level yet, the fall in GDP was of this year compared to the same period in
smaller than expected. The headline message is 2019. This is a much larger fall compared to the
now how well the economy continues to adapt 13% drop in trade with non-EU countries,
to restrictions. The lockdown between January meaning total imports and exports with EU
was 10% more stringent than April 2021, countries has lagged behind non-EU countries,
according to the Oxford stringency index.¹ But reversing pre-pandemic and pre-Brexit trends.
the monthly hit to GDP in January was just a While it is too early to make conclusions about
seventh of the month-on-month contraction in the impact of Brexit on EU trade – given the
GDP in April last year. multitude of factors related to the pandemic
which are influencing world trade, and the time
required to negotiate trade deals with other key
Monthly GDP growth has outperformed trading partners, including the US – there is a
2 expectations over the third national
lockdown. The UK economy is estimated to
risk that these new trade patterns become
established as long-term trade barriers persist.
have grown by 2.3% in April for the third If this happens, the UK could lose out on the
consecutive month – the fastest monthly growth benefits associated with trading with
rate since July 2020. It means that now 83% of geographically close partners.
the output lost from the first national lockdown
has now been recovered. While there is cause
for optimism in the latest figures, there was
negative growth in the production and
construction sectors.
Our projections for the UK economy
UK GDP output is expected to continue its We have upgraded our projections of annual
1 upward trend, with month-on-month growth of
1.8% in May, followed by a modest 0.2%
2 UK GDP growth in 2021 and beyond. Under
our ‘slow recovery’ and ‘quick recovery’
increase in June before picking up speed to scenarios, the expected annual GDP growth
about 2.5% in July under our ‘quick recovery’ rates range from around 6.5% to 7.2% in 2021,
scenario, or around 0.4% if Stage 4 of the continuing to grow by 4.1% to 5.5% in 2022
reopening roadmap is delayed further under our before slowing down to about 1.2% and 1.9% in
‘slow recovery’ scenario. 2023. For 2021, the upward revision is around 3
percentage points, which is equivalent to every
person in the UK being roughly £1,000 better off
than initially anticipated. However, by the end of
this year, we expect economic output to still
stand at 1.5% and 0.2% below its pre-crisis
levels under the two scenarios.
¹ University of Oxford, Covid-19 Government Response Tracker – link
Please note, the Oxford COVID 19 Government Response Tracker (stringency index) uses 20 indicators to score the
strictness of government restrictions between 1 and 100, with a higher number representing more stringent restrictions.
UK Economic Outlook 1
We expect the UK economy to recover to its Household spending and government
3 pre-crisis levels as early as Q1 2022. Under
the ‘quick recovery’ scenario, we expect the UK
7 consumption will likely drive growth this
year, as consumers unleash some of their £180
will reach its Q4 2019 levels by the end of Q1 billion of excess savings on the economy. We
2022, and by the end of 2022 under the ‘slow expect business investment to be positive but
recovery’ scenario. These are 4-6 quarters sooner cautious, boosted by the government’s super-
than our previous forecasts made in February. deduction on capital allowances. However, new
variants, trade challenges and long-term
The upwards revisions to our projects reflect economic scarring continue to create
uncertainty and risk to the UK’s recovery in the
4 some key upside trends. These include the
UK’s stronger-than-expected economic medium and long run.
performance during lockdown this year, the
rapid vaccination programme, the successful We expect most sectors to return to growth
delivery of the first 3 Stages of the government’s
reopening roadmap with full school resumption, 8 in 2021, albeit at uneven rates. At the top end,
the health and social sector, construction and
and extensions of various government support education are likely to lead growth in 2021,
including the furlough scheme. On the downside, growing between 9%-23% under our ‘quick
the recovery has been partly offset by the recovery’ scenario and between 7%-19% under
emergence of new variants. the ‘slow recovery’ scenario. Already surpassing
their pre-crisis levels, growth in construction
Our two scenarios reflect the considerable and education sectors are expected to be
5 uncertainty over the pace of the UK’s
economic recovery over our projection
supported further by growing demand for larger
properties post-lockdown, home upgrades and
horizon. While we expect the rapid rollout and education support to help school children catch
early success of the vaccination programme to up from their lost learning last year.
boost business and consumer confidence in the
short run, the long term trajectory depends on: But lingering effects from the pandemic will
(i) how businesses and workers respond to
winding down of various government support, 9 drag on growth in the hospitality and
entertainment sectors. Continued restrictions
(ii) uncertainties around the continued pace of or social distancing requirements, spending
vaccination, its effectiveness against new pattern changes and consumer caution could
variants associated with likelihood of further weigh down on recovery of these sectors, which
delays to Stage 4, (iii) the extent to which are likely to remain subdued during 2021. Going
businesses adapt to various new trading into next year, we expect a large vaccinated UK
arrangements with UK trading partners, population, supported by behaviour changes
including the US, and (iv) the degree of long- post-pandemic, to assist the recovery of the
term economic scarring. sectors, with the hospitality sector to grow
between 25%-31% in 2022, and entertainment
Uncertainty associated with the pandemic output to increase by 8%-10% under our two
6 has caused unprecedented and sizable
revisions to the UK GDP predictions among
scenarios. Despite expected strong growth,
both sectors are likely to remain 34%-40% and
forecasters. Back in August 2020, forecasters 23%-26% below their pre-crisis levels by the
were optimistic that the economy would quickly end of 2022.
rebound, and return to the pre-pandemic levels
as early as Q2 2021. However, the second wave
of infections and winter lockdown raised fears of
a prolonged economic downturn, resulting in an
approximately two quarter delay in their
timelines on average. A successful vaccine
rollout in early 2021 has boosted hopes of a
faster recovery, with the timeline expectations
now similar to those made at the start of the
pandemic and pace of recovery markedly
upgraded to the highest levels since the Second
World War. Going forward, we expect cautious
upward revisions as uncertainty around impact
of new variants and household spending
priorities gradually fades.
2 UK Economic Outlook
The UK labour market
The health of the labour market appears to We expect the unemployment rate to
1 be improving. The headline LFS unemployment
rate fell to 4.7% in the three months to April,
2 average around 5% in 2021, rising to a high of
around 5.5%. We expect the key drivers of the
down from 5% in the previous quarter. The rate unemployment rate to be the ending of the
of redundancy is now back to pre-pandemic furlough scheme and an increase in labour
levels and vacancies in most industries are now market participation as the economy reopens. It
above pre-pandemic levels. These recent is likely the unemployment rate could gradually
improvements are encouraging for the UK’s fall back down towards 4.5% in 2022 and
economic recovery and the unwinding of the beyond. As the furlough scheme winds down, it
government’s furlough scheme. But there is still is uncertain how businesses and workers will
a long road to recovery, as payroll employees respond. While we are unlikely to experience a
remain 553,000 below pre-pandemic levels. 'big bang' of unemployment, we are also unlikely
to see a completely smooth transition of all
furloughed workers back to their old jobs.
Inflation outlook
CPI inflation hit the Bank of England target in We expect inflation to peak between 2.5%
1 May at 2.1%, as core inflation (which excludes
energy, food, alcohol and tobacco) increased
2 and 2.8% in Q4 this year, and then to gradually
return to target from 2022 onwards. In the short
from 1.3% in April to 2%. But it is important to term, inflation is unlikely to follow a smooth path,
interpret the latest data in the context of the low with many different factors feeding irregularly
prices we saw 12 months ago during the into the monthly data. In general, inflation is
pandemic. This means that so-called 'base likely to follow an upwards trend as the
effects' are driving up the rate of inflation, and economy continues to reopen. We expect the
will likely do so for a few more months. Bank of England to continue to prioritise
supporting the recovery with low interest rates,
over reducing inflation.
UK Economic Outlook 3
Recent developments in the UK economy 4 UK Economic Outlook
Recent developments in the
1
UK economy
In this section, we discuss how the UK
economy has performed in recent Box A: The global economy
months. The UK economy was one of
the hardest hit of major economies by As with the UK, many other regions across the world experienced an
the COVID-19 pandemic in 2020, with increase in COVID-related restrictions in response to rising cases. Quarter-
annual GDP declining by 9.8% on-quarter global GDP growth was 0.5% in Q1 of this year, with momentum
compared to 2019. This was due to picking up in the US, but negative growth in the euro area and Japan. Growth
the UK’s high incidence of COVID-19 in China also slowed, following its strong recovery over the previous three
and death rate, as well as its service- quarters and reflecting the reintroduction of some restrictions. Global output
based economy, for which it is harder as of March was 1.5% below pre-pandemic levels.
to implement social distancing, and its
dependence on consumer spending, The US economy grew by 1.6% in Q1, boosted by its fiscal stimulus and
which was hit hard by restrictions. successful vaccine rollout. While headline GDP growth conveys a very similar
picture to the UK (with its Q1 GDP growth rate of 1.5%), there are a number of
By the end of 2020, UK GDP was key distinctions in the US policy response and current economic conditions
6.3% below its pre-pandemic level in which will have different implications for its outlook, compared to the UK.
February 2020. So to what extent has
UK GDP recovered so far in 2021? • Fiscal stimulus: US growth is checks, it is estimated that US
expected to be supported in the households have accumulated
short-term by additional fiscal more than $2 trillion of excess
stimulus. In March, a package savings.2 Together, they are
of $1.9 trillion was approved. In expected to drive a significant
addition, President Biden has splurge in consumer spending.
announced plans for two further
• Inflation: The annual rate of US
stimulus packages. These are
inflation jumped to 4.2% in
more long-term in nature, and
April. The inflation outlook in the
focus on infrastructure,
US looks different to the UK’s,
transport, education and child
in part because of its far greater
care. If passed, President
stimulus and potential for
Biden’s spending would total
consumer spending. The other
over $6 trillion. The US’ total
piece of the puzzle is the
spending on the COVID-19
change in the Federal Reserve’s
pandemic as of April 2021
mandate towards average
stands at over 25% of GDP,
inflation targeting. This means
compared to 16% in the UK.
the Fed is now aiming to
• Direct payments: A unique achieve an average inflation
feature of the US’ stimulus is the level of 2% over time, meaning
direct payment cheques given inflation will be allowed to
to eligible households. Without moderately overshoot its target
accounting for the stimulus to balance periods when
inflation was below target.
2
Moody’s Analytics, Weekly Market Outlook, June 2021 – link
UK Economic Outlook 5
UK GDP contracted by 1.5% in Q1. Figure 1.1: UK monthly GDP growth (%) vs stringency index of
With the reintroduction of tighter government restrictions
lockdown restrictions at the end of
2020, the UK economy began the 15.0% GDP (left) Stringency Index (right) 100
year with negative quarterly growth. 12.5%
90
10.0%
However, the headline message from
7.5% 80
Q1 is how well the economy is 5.0%
adapting to restrictions. The 2.5% 70
government’s lockdown restrictions 0.0%
60
between January and March 2021 -2.5%
were the tightest seen since the start -5.0% 50
of the pandemic, averaging 85 on the -7.5%
40
-10.0%
Oxford stringency index, compared
-12.5% 30
to an average of 70 between April
-15.0%
and December 2020.3 The economic -17.5% 20
impact of tighter restrictions has -20.0%
10
been significantly smaller compared -22.5%
to the first national lockdown in April. -25.0% 0
01/01/2020
01/02/2020
01/03/2020
01/04/2020
01/05/2020
01/06/2020
01/07/2020
01/08/2020
01/09/2020
01/10/2020
01/11/2020
01/12/2020
01/01/2021
01/02/2021
01/03/2021
01/04/2021
To illustrate, the lockdown between
January was 10% more stringent
than April 2021, according to the
Oxford stringency index.4 But the
Source: ONS (left), Oxford Stringency Index (right)
monthly hit to GDP in January was
just a seventh of the month-on-month Firms and employees are now much better prepared to work under restrictions,
contraction in GDP in April last year. especially in sectors like construction and manufacturing. Consumers are also
well adapted; over Q1, online sales as a share of total retail sales reached a new
record high of 34%. This adaptation to restrictions is evidenced by a smaller fall
in Google mobility data compared to the first national lockdown, and the recovery
in mobility even while restrictions remained between January and March.
Figure 1.2: Change in number of visitors from the beginning of the
pandemic (February 2020) in the United Kingdom, 7-day rolling
average, %
10 1 National 2 National 3 National
Lockdown Lockdown Lockdown
0
-10
-20
-30
-40
-50
-60
-70
Christmas
-80
-90
Feb Apr May Jun Jul Sep Oct Nov Jan Feb Mar May
20 20 20 20 20 20 20 20 21 21 21 21
Workplaces Retail and Recreation Transit
Source: Google Mobility Data
3
University of Oxford, Covid-19 Government Response Tracker – link
Please note, the Oxford COVID 19 Government Response Tracker (stringency index) uses 20 indicators to score the strictness
of government restrictions between 1 and 100, with a higher number representing more stringent restrictions.
4
University of Oxford, Covid-19 Government Response Tracker – link
Please note, the Oxford COVID 19 Government Response Tracker (stringency index) uses 20 indicators to score the strictness
of government restrictions between 1 and 100, with a higher number representing more stringent restrictions.
6 UK Economic Outlook
The contraction in growth in Q1 was mainly driven by a decline in household consumption and gross capital formation.
UK trade contracted further in Q1 2021, with a fall both in imports and exports of goods and services.
• Household consumption: recovery. For instance, credit and • Gross capital formation: Quarterly
Household consumption declined debit card spending in May stood growth was -2.3% in Q1 of this
for the second consecutive quarter, at 98.7% of pre-pandemic levels, year, with the recent decline mainly
falling by nearly 4% in the three compared with only 80.6% in driven by a 51.8% fall in transport
months to March relative to Q4 March, as easing restrictions led to equipment. Business investment
2020, following the reintroduction the reopening of bars, shops and also fell by 11.9% in Q1, reversing
of stringent restrictions. Spending social events. the majority of the recovery made
in restaurants and hotels took the • Government consumption: during the last three quarters of
biggest hit, declining by 26% in Q1 Government consumption was the 2020, as some caution about the
2021 relative to the previous only component of GDP to UK and global economic recovery
quarter. The restrictions also experience positive q-on-q growth remains. Gross capital formation
weighed on retail activity and in the first quarter of 2021. The stood at 95.2% of its Q4 2019 level.
spending on transport, although 2.6% quarterly increase was driven • Net exports: UK exports and
less so than during the first by government health expenditures, imports fell in Q1 of this year,
lockdown, reflecting the mainly in relation to COVID-19 reflecting the previous stockpiling
adaptability of consumers and vaccinations and NHS test and ahead of the Brexit transition period
businesses. Household trace, as well as spending on and the ongoing impact of
consumption remains 12.8% below defence. These more than offset COVID-19. On balance, there was a
pre-pandemic levels (Q4 2020), but the fall in spending on education greater fall in imports resulting in an
high frequency data from the start given school closures. improvement of the UK’s trade
of Q2 points to an emerging balance, recording a deficit of 0.5%
of nominal GDP, compared to 2.7%
in Q4 2020.
Figure 1.3: Quarter-on-quarter growth in GDP expenditure components, Q2 2020 – Q1 2021
-20.8%
Household consumption 19.7%
-1.7%
-3.9%
-17.3%
15.8%
Government
6.7%
2.6%
-20.7%
19.0%
Gross capital formation
4.4%
-2.3%
-10.1%
-0.5%
Exports
6.1%
-7.5%
-21.1%
14.6%
Imports
11.0%
-13.9%
-25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Q2 2020 Q3 2020 Q4 2020 Q1 2021
Source: ONS
UK Economic Outlook 7
Box B: UK trade with the EU
Businesses are continuing to grapple Comparing trade over January to April 2021 to the same period in 2019:
with the UK’s new trading • Total trade (exports plus imports) with the EU is 27% lower, compared to a
arrangements with the EU. Survey 13% fall with non-EU countries.
evidence from the CEP shows that over
• EU exports are down 24%, compared to a 5% fall with non-EU countries.
a third of all businesses have been
affected by delays at the border, a • EU imports are down 29%, compared to a 18% fall with non-EU countries.
further third by additional customs With trade shifting to non-EU countries (for example, UK exports to non-EU
costs, and over 20% by regulatory countries now account for more than 50% of total UK food and drink exports),
checks at the border. Manufacturing these trends may become structural as a result of long-term trade barriers or if
firms in particular have been impacted, new trading patterns become established before businesses fully adjust to new
with almost 50% of firms impacted by EU arrangements.
delays and customs costs, compared
to less than 10% of professional and IT Figure 1.4: UK imports and exports of goods with the EU and
services firms.5 non-EU, Jan – Apr 2019 vs 2021, £ billion, chained linked
volume measures
In recent months, trade with non-EU
countries has exceeded EU trade – Exports
total imports and exports over January 18
to April were 13% higher with non-EU
16
countries compared to the EU. While it
14
is too early to make conclusions about
the impact of Brexit on trade, 12
especially given the multitude of other 10
factors impacting trade such as the 8
pandemic and global supply chain 6
distortions, Figure 1.4 illustrates the 4
extent to which EU trade has fallen
2
compared to its pre-pandemic, relative
0
to non-EU trade.
January February March April
EU – 2019 EU – 2021 Non-EU – 2019 Non-EU – 2021
Imports
30
25
20
15
10
5
0
January February March April
EU – 2019 EU – 2021 Non-EU – 2019 Non-EU – 2021
Source: ONS, PwC analysis
5
Centre for Economic Performance, The impacts of COVID-19 and Brexit on the UK economy: early evidence in 2021, May 2021 – link
8 UK Economic OutlookUK GDP is estimated to have grown While there is cause for optimism in the latest figures, there was negative growth
by 2.3% in April for the third in the production and construction sectors. The next few months could be
consecutive month. According to the critical for the government as restrictions hopefully ease and the furlough
latest ONS estimates, this is the fastest scheme comes to an end.
monthly growth since July 2020. It
means that now 83% of the output lost • Services: output grew 3.4% in April, but remains 4.1% below pre-pandemic
from the first national lockdown has levels. Growth was driven by strong monthly growth in retail volumes of over
now been recovered. We caution, 9% as non-essential retail reopened, and education as more pupils returned
however, that the monthly GDP data is to school.
highly volatile and should be treated • Production: output fell by 1.3% in April, with manufacturing contracting
with caution – previous months data slightly by 0.3% as five out of its 13 subsectors experienced negative growth.
have been heavily revised. Most notably, the manufacture of basic pharmaceutical products and the
manufacture of transport equipment.
• Construction: output fell for the first time this year by 2%, following strong
growth in March, but the sector’s output does remain slightly above pre-
pandemic levels.
Figure 1.5: Monthly output index of UK sectors, seasonally
adjusted, Index (Feb 2020 = 100)
110
100
90
80
70
60
50
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
-10
Monthly GDP Services Manufacturing
Construction Production
Source: ONS
UK Economic Outlook 9The UK economy followed different Figure 1.6: UK monthly GDP growth following the 1st and 3rd
recovery patterns in April 2020 and National Lockdown, Apr 20 (M0) – Jun 2020 (M3) vs Jan 21 (M0) –
January 2021 (Figure 1.6). The Apr 21 (M3), %
month-on-month decline in GDP
following the reintroduction of National Lockdown 1 Month Post Lockdown 2 Months Post Lockdown 3 Months Post Lockdown
Announcement Announcement Announcement Announcement
restrictions in January 2021 was 16 15.0%
percentage points smaller than the School re-opening
10.0%
decline in April 2020. This is despite Roadmap for
the January 2021 lockdown being 5.0%
lifting lockdown
Roadmap for
more stringent and reflects the lifting lockdown School re-opening
improved adaptability of firms and 0.0%
M0 M1 M2 M3
consumers. Slower monthly growth in
the three months following the January -5.0%
2021 lockdown, compared to the first
-10.0%
lockdown at the beginning of the
pandemic, are to be expected as GDP -15.0%
edges closer to pre-pandemic levels.
For example, GDP in April stood at -20.0%
over 96% of February 2020 levels,
compared to only 78% in May last year. -25.0%
Monthly GDP Following 1st Lockdown, April-July 2020 Monthly GDP Following 3rd Lockdown, Jan-April 2021
Source: ONS
Business activity
According to the Business Insights and retail, wholesale and logistics sectors its launch in 1998 at 62.0. A faster than
Conditions Survey (BICS), the number leading the way. Low interest rates, anticipated recovery, partly driven by a
of businesses currently trading has confidence about the recovery and a successful vaccine rollout, and the
increased to 87% at the end of May, surge in online shopping have been revival in world trade flows, have
the highest proportion since key supporting factors. contributed to accelerating business
comparable estimates began in June sentiment. Over 70% of companies
2020 and an increase from around The uptick in business activity across forecast higher production in one
80% in April. There were almost the UK has also been reflected in a year's time, compared to only 3%
137,000 new businesses created in the preliminary reading of the May expecting a decline.
first quarter of this year, 71% higher Composite Purchasing Manager Index
than pre-pandemic (Q4 2019), with the (PMI), which hit its highest level since
10 UK Economic OutlookContacts
Outlook for the UK economy
UK Economic Outlook 11Outlook for the UK economy
2
In this section, we discuss the Table 1.1: Projected annual real GDP growth by scenario
outlook for the UK economy as it
continues to reopen and we outline
Real GDP growth 2021 2022 2023
our projections for GDP growth over
the next three years.
Quick recovery scenario 7.2% 5.5% 1.9%
Following three consecutive months
of growth to April 2021, UK GDP Slow recovery scenario 6.5% 4.1% 1.2%
growth is expected to continue its
upward trend. The four-week delay to Source: PwC analysis
the end of restrictions, announced on
prediction for month-on-month growth • The rebound from the lifting of
14 June, is expected to moderate
in February of 0.36% aligns to the restrictions (if Stage 4 goes ahead) is
potential GDP growth in July, but we
ONS’ subsequent official estimate of occurring from a much higher base
don’t anticipate it to hamper recovery
0.4%. In March, monthly GDP growth than the same time last year, with
as most parts of the economy have
outperformed our expectation of 1.1%, output expected to be around
already reopened during Stage 3,6
reaching 2.1% due to extensions of 2% below pre-crisis levels, compared
and the UK’s rapid vaccination rollout
various government support measures to around 15% last summer.
has boosted business and consumer
in the Chancellor’s Spring Budget 2021 • One of the main drivers of the
confidence. As the remaining
totalling to £65bn,8 and the introduction recovery last summer was business
restrictions are cautiously lifted, we
of a four-stage roadmap to the easing investment (grew by 9.4% in Q3
expect quarter-on-quarter growth in
of lockdown restrictions starting as 2020),11 which was mostly to ensure
Q3 to range between 1.0% and 2.3%,
early as March.9 covid-secured workplaces. As those
and the UK to remain around 1.5%
and 0.2% below its pre-crisis level by measures have been largely put in
Looking ahead, we expect the UK
the end of this year under our ‘slow place, we expect businesses to be
economy to grow by 0.2% in June
recovery’ and ‘quick recovery’ relatively cautious about large
relative to May, followed by 0.4% –
scenarios. investments as uncertainties remain
2.5% in July under the ‘slow recovery’
over the summer.
and ‘quick recovery’ scenarios. The
First published in November last • While the delay to the final stage of
‘slow recovery’ scenario takes into
year, our Nowcasting model the reopening roadmap will affect
account the possibility of a further
continues to provide real-time some businesses that are heavily
delay to Stage 4, beyond 19 July. The
estimations of the UK monthly GDP reliant on large indoor events such
July monthly growth rate is expected to
growth. A Nowcasting model is an as live music and nightclubs, and
be much smaller than the 7.3%
econometric model which uses fast those operating at reduced capacity,
month-on-month growth experienced
data indicators, such as Google like hospitality, the majority of the
a year ago when all restrictions from
mobility data, to provide more timely economy has already reopened
the first national lockdown were lifted
estimates of economic activity than under Stages 2 and 3 of the
in July 2020.10 There are a number of
official data.7 In our February roadmap. Therefore, the expectation
reasons for this:
UK Economic Update, our is that GDP will continue to grow
post-Stage 4, but at a slower pace.
6
Please note, during stage 3 of the roadmap, some restrictions remain in place for ‘high-risk’ sectors,
such as nightclubs and larger indoor performance venues
7
See our PwC Blog for technical details – link
8
HM Treasury, The UK Budget 2021 announcement, March 2021 – link
9
Cabinet Office, COVID-19 Response – Spring 2021, February 2021 – link
10
ONS – link
11
ONS – link
12 UK Economic OutlookOutlook for 2021 and 2022 Figure 1.7: Epidemiological scenarios
There are a number of factors which we
expect to determine the pace of the
UK’s economic recovery over our
projection horizon. These include the
following:
• The response of businesses and
workers as various government
measures are winding down, most
notably the furlough scheme.
• The continued pace of mass
vaccination against COVID-19 in
the UK and the effectiveness of
such vaccines at protecting people
against new variants and therefore
at halting the spread of the virus.
Specifically, there is a risk of a
surge of cases among
unvaccinated individuals (see
Figure 1.7 for our epidemiological
scenarios).
• The extent to which economic
scarring impacts the UK’s long-
term recovery.
• The outcome of the UK trade
negotiations with trading partners,
including the US, and how
businesses adjust to various new
trading arrangements.
Source: PwC analysis
To reflect the range of likely outcomes across these various factors, we have
designed two illustrative scenarios that capture the extent to which early success
of the vaccination programme supports the resumption of normal activity in the
economy,12 businesses adapt to the new trading relationships and possibility of
long term economic scarring.
Under the ‘quick recovery’ scenario, we assume the following:
• The four-week delay in the • Trade negotiations between the UK
Government’s roadmap is sufficient and key trading partners, including
in keeping the hospital admission the US, go smoothly. Under this
12
Please note, we assume that a rate low and allowing more people scenario, we assume that most
combination of a successful
vaccination programme and cautious to be vaccinated. businesses adapt successfully and
lifting of restrictions in the UK enables • There is limited long-term economic quickly to various new trading
the ongoing reduction in hospital scarring, as various government arrangements.
admissions. While there is a
possibility of local or national support schemes assist the • Under this scenario, we expect
restriction measures being put in recovery of the economy as a whole that UK GDP recovers to its
place temporarily to control small and the labour market in particular. pre-pandemic levels by the end
surges of new variants, it is unlikely to of Q1 2022.
be to the same extent as in the last
three national lockdowns.
UK Economic Outlook 13Under the ‘slow recovery’ scenario we assume the following:
• A further delay to Stage 4 of the • Trade negotiations between the UK In both scenarios, we assume a mass
government’s roadmap is required and key trading partners, including vaccination campaign will be largely
to curb the transmission of new the US, progress slowly but completed in 2021 although regular
variants. smoothly. Under this scenario, boosters might be required. Generally,
• Long term economic scarring is we assume that businesses take we expect early success of the
partially managed by various longer to adapt to various new vaccination programme to boost
Government support schemes, but trading arrangements. business and consumer confidence in
scarring remains significant • UK GDP is assumed to recover the short run, supporting the UK’s
especially in the labour market. much slower compared to the recovery in the second half of 2021.
‘quick recovery’ scenario, and will However, the effect may be short-
not reach the pre-pandemic levels lasting, as the persistence of the
until the end of 2022. pandemic across the world, weak global
economic performance and possible
economic scarring take their toll.
Monthly GDP profile Figure 1.8: UK monthly Real GDP in the ‘quick recovery’ scenario
We provide projections of GDP growth
three months ahead of official ONS data 105 10%
(see Figure 1.8). Our projection for May
is developed using our Nowcasting 100
1.8% 5%
model and is scenario-agnostic. Our
UK Real GDP index (Q4 2019 :100)
2.5%
projections for June and July have been 0.2%
95
developed using a hybrid approach, 0%
which uses our Nowcasting model, as
90
well as other techniques, and may vary
by scenario. Beyond July, we provide -5%
quarterly projections. 85
Using our Nowcasting model, we -10%
80
expect UK GDP growth to be 1.8% in
May 2021. Breaking down our
-15%
nowcast by sector, we see that the 75
construction sector is expected to
grow the strongest in May. The service 70 -20%
May 20
May 21
Nov 20
Aug 20
Sep 20
Dec 20
Mar 20
Mar 21
Feb 20
Feb 21
sector is expected to contribute the
Jun 20
Jun 21
Jan 20
Oct 20
Apr 20
Jul 20
Jul 21
most (79%) to the May growth rate,
mainly due to its size (it accounts for
Monthly real GDP (left axis) % MoM growth (right axis)
almost 80% of the economy).
Source: PwC analysis
The economic recovery is likely to
continue in June but at a slower pace Under our two scenarios, monthly GDP Under our ‘slow recovery’ scenario,
of around 0.2% compared to May. growth varies for July to reflect the monthly growth in July is expected to
This is due to relatively high GDP possibility of a further delay to Stage 4 be more moderate at 0.4%, as
levels expected after three of the lockdown roadmap due to new businesses and consumers adjust to
consecutive months of strong growth variants. Within our ‘quick recovery’ further delays to lifting of all lockdown
(in March-May) combined with a scenario, month-on-month growth is restrictions.
prolonged Stage 3 of the Government estimated at 2.5% in July, as the
roadmap moderating the recovery. economy fully reopens, boosting
confidence, investment and activity.
14 UK Economic OutlookQuarterly GDP profile Figure 1.9: UK Real GDP index (Q4 2019 = 100), quarterly levels
in each scenario
In terms of our short to medium term
view, our quarterly GDP projections up 110
UK Real GDP Index (Q4 2019:100)
until the end of 2023 show a skewed
105
‘W-shaped’ recovery for the UK (see
Figure 1.9). 100
Under our ‘slow recovery’ and ‘quick 95
recovery’ scenarios, the expected 90
annual GDP growth rates range from
85
around 6.5% to 7.2% in 2021, followed
by 4.1% to 5.5% in 2022 before 80
slowing down to about 1.2% and 1.9% 75
in 2023 as the UK economy begins to
70
return to its pre-pandemic long-term 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
growth trend.
Quick recovery Slow recovery
Our expectation is that the economy
Source: PwC analysis
will recover to the pre-crisis levels by
Q1 2022 under the ‘quick recovery’ We have, therefore, revised up markedly our projections for 2021 from between
scenario, and by Q4 2022 under the 3.4% and 4.6% under the ‘slow recovery’ and ‘quick recovery’ scenarios to between
‘slow recovery’ scenario. These are 6.5% and 7.2% (see Box C for further discussion on forecast revisions). These
around 4-6 quarters faster than our projections are broadly in line with other third-party projections (see Figure 1.10).
previous forecasts made in February,
as stronger-than-expected economic Figure 1.10: Comparison of GDP growth projections, 2021-2022
performance during lockdowns means 2021 projections
the UK economy is set to recover its
lost output faster than initially European Commission (May) 5.0%
anticipated. This is supported by early
IMF (April) 5.3%
success of the vaccination
programme, the successful delivery of PwC 'Slow recovery' scenario 6.5%
the first 3 Stages of the government’s
Consensus forecasts* (June) 6.7%
reopening roadmap with full school
resumption, and extensions of various OECD (May) 7.2%
government support including the
PwC 'Quick recovery' scenario 7.2%
furlough scheme and Stamp Duty
holiday, but partly offset by the impact Bank of England (May) 7.3%
of the new variants.
2022 projections
PwC 'Slow recovery' scenario 4.1%
IMF (April) 5.1%
European Commission (May) 5.3%
Consensus forecasts* (June) 5.3%
PwC 'Quick recovery' scenario 5.5%
OECD (May) 5.5%
Bank of England (May) 5.8%
Source: PwC, EC, OECD, HMT, IMF, BoE
* HMT comparison of independent forecasts (June 2021) – average of new forecasts made in last month
UK Economic Outlook 15Box C: Uncertainty associated with the pandemic has caused unprecedented and sizable revisions to
the UK GDP forecasts
There have been swings in forecasters’ Figure 1.11: Changes in forecasters’ expectations for 2021 GDP growth*
optimism over the past year about the
UK’s economic recovery in 2021. 16%
Forecasters were initially optimistic that 14%
GDP growth would quickly rebound, Forecast 2021 GDP growth
12%
with the Bank of England forecasting a
likely return of GDP to pre-pandemic 10%
levels in the second half of 2021 or first 8%
half of 2022 back in August 2020. 6%
However, the second wave of infections
4%
and winter lockdown raised fears of a
prolonged economic downturn. On 2%
average, forecasters extended their 0%
timelines for a full recovery by Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21
approximately two quarters. A Month forecast was published
successful vaccine rollout then boosted
hopes of a faster recovery, with Bank of England HMT Consensus OBR PwC
expectations now similar to those made Source: BoE, HMT, OBR, PwC analysis
at the start of the pandemic. * Mid-point of forecasts taken when more than one forecast scenario made
Figure 1.11 illustrates how GDP forecasters expected that the UK was The rapid vaccination of the UK
forecasts have evolved over the past on an encouraging path to recovery. population accelerated the easing of
year from various sources. The GDP restrictions in April and May. GDP
projections made in Q2 2020 assumed As the second wave of infections growth in 2021 is expected to be further
there would be a swift economic materialised towards the end of 2020, the supported by fiscal measures that were
rebound in 2021. It was expected that reinstating of Covid-related restrictions announced in the March Budget. The
social distancing measures would be caused forecasters to downgrade their Chancellor’s £65 billion plan includes an
gradually lifted from Q3 2020, and that growth predictions for 2021. At the extension to the Coronavirus Job
GDP would therefore recover relatively beginning of 2021, most forecasters Retention Scheme (CJRS) and a new
predicted that GDP would fall in Q1 2021
rapidly. The government moved quickly government loan guarantee scheme.
as the restrictions squeezed consumer
to support businesses through the These effects make forecasters
spending. It was expected that vaccines
furlough scheme, and with grants, cautiously optimistic that UK GDP will
would boost economic growth in the
loans and tax holidays to businesses. return to pre-pandemic levels between
second half of the year, but that the
It was anticipated that these measures Q3 2021 and Q4 2022.
greatest proportion of the post-covid
would prevent any deep economic
recovery could fall in early 2022. Most forecasters anticipate that the
scarring and support a swift recovery..
lifting of restrictions will coincide with
Most recently, forecasters have
The decline in expected 2021 GDP an upswing in consumer spending,
markedly upgraded their growth
growth in the second half of 2020 before a seasonal resurgence of the
predictions for 2021, with the Bank of
reflects a faster than expected recovery virus slightly moderates growth over
England and CBI respectively revised
in the months following March 2020. the winter. The extension by four
their forecasts to 7.3% and 8.2% – the
While consumer spending fell more weeks of the last phase of restrictions
fastest rates since the Second World
than household incomes, retail sales is likely to reduce hospitality and
War from around 5% and 6% made at
(mostly e-commerce) rose sharply in Q2 the beginning of the year.13 The impact leisure spending below forecasters’
2020. Businesses adapted to social of the UK’s winter Covid-restrictions on expectations. Though it remains
distancing measures, so only 11% of spending was less than was generally uncertain whether further delays would
businesses closed or paused trading in anticipated. The government also be required and if unspent consumer
November compared to 24% in the first increased its output above expectations spending would be deferred until later
lockdown. The result was that, when a with higher spending on activities in 2021 or 2022. Therefore, we expect
second wave was still uncertain, related to test and trace. cautious upward revisions as
uncertainty steadily fades.
13
The BoE forecasts were made in February and May 2021 – link
CBI forecasts were made in December 2020 and in June 2021 – link
16 UK Economic OutlookDrivers of recovery
Stronger household spending Increased government Positive but modest growth
consumption in business investment
As the largest component of GDP, We anticipate the government will Following a year of subdued business
household spending could be an continue some forms of covid support investment, we expect it to contribute
important driver of the UK’s economic package beyond 2021, currently positively to GDP growth this year,
recovery this year. Since March 2020, totalling more than £407 billion,15 with albeit modestly. The continued
lockdown restrictions have resulted in marked winding down toward the end reopening of the economy will likely
pent-up demand and led households to of the year. The Treasury has signalled boost confidence and a recovery in
accumulate excess savings, which are its intention to embed the levelling demand and sales, incentivising
estimated to reach £180bn by the agenda within its economic recovery businesses to invest. The super-
middle of 2021.14 With the reopening of strategy, helping businesses invest and deduction on capital allowances
non-essential retail and hospitality, grow across the whole country. While announced in the Chancellor’s March
consumers will likely be keen to go out borrowing reached 16.9% of GDP in budget could also encourage
and spend money on leisure and goods 2020-21 – the highest level in peacetime companies to bring forward their
and services. However, it is uncertain to Britain – the government expects that investment in the next two years,
what extent consumers will spend their its investment-led recovery, driven by its although it may then cause a drop off in
excess savings this year (see Box D for Green Industrial Revolution plan and investment once the policy ends.
further discussion). Even if a significant upskilling, will cause underlying debt to Caution among some investors may
share of the UK’s excess savings are fall as a share of GDP from 2023-24. It impact the take-up rate. In the Bank of
spent over the next 2-3 years, this could take time before the direct and England’s Q1 Agent’s summary of
additional consumption activity is multiplier effects of these investments business conditions, investment
likely to be a one-off and should be to feed through the economy. It would, intentions have picked up, but remain
considered as a short to medium however, provide a much needed boost weaker than pre-pandemic, with most
term driver. to investment and to sentiment in the plans conditional on demand recovering
short term. over the summer.16 The strength of
intentions varies by sector – higher in
manufacturing, with plans to invest in IT
and upgrading machinery, and lower in
consumer services. However, continued
uncertainty over the easing of
restrictions, the possibility of new
variants of the virus causing a rise in
infections, and the return to the office,
together with a desire to strengthen
balance sheets may continue to weigh
on investment intentions.
14
Office for Budget Responsibility (OBR), Economic and Fiscal Outlook, March 2021 – link
15
HM Treasury, The UK Budget 2021 announcement, March 2021 – link
16
Bank of England (BoE), Agents’ summary of business conditions 2021 Q1, March 2021 – link
UK Economic Outlook 17Box D: To what extent will households spend their excess savings?
This is currently one of the biggest The extent to which households run • Employment outlook is
economics questions and one which down these excess savings this year uncertain: When deciding whether
will have implications for the pace of will determine the path for consumer to spend or save, consumers’
the UK’s recovery, especially given spending. Below, we discuss the perceptions of the future economic
household consumption is the largest upside and downside factors at play. outlook play a role. Historically,
element of GDP in the UK economy, during downturns households tend
accounting for around two-thirds. • Spending intentions have to increase savings as a share of
increased: There has been a rise in disposable income – referred to as
Over the past year, households have the reported share of households precautionary saving. To date, the
accumulated huge amounts of savings planning to spend part of their labour market has fared relatively
in excess of what they would have if it savings in recent months, for well over the pandemic, propped
were not for the pandemic, as example according to a recent Bank up by the government’s furlough
lockdown restrictions prohibited of England/NMG survey (see Figure scheme and other business
spending. Precautionary savings likely 1.12). The Bank of England is now support measures. But the outlook
also played a role, given the assuming 10% of excess savings for unemployment remains
uncertainty regarding the economic will be spent in the next three years, uncertain with the end of the
and employment outlook. The up from 5% before.19 PwC’s latest government's furlough scheme in
household savings ratio reached a Consumer Sentiment survey from September this year. Furloughed
historic high of almost 30% in Q2 last Spring 2021 supports this, with workers will have to balance their
year and remains high at 16% as of Q4. consumer confidence now at its expectations of job security against
To put this into perspective, the highest level since the Sentiment the risks of redundancy.
savings ratio has averaged 8% since Index began back in 2008, and it is
• Accumulation of savings is
the start of the 21st century. The Bank the first time it's been back in
uneven across the income
of England estimates that between positive territory since before the
distribution: A record high
March and November 2020, start of the pandemic. This has been
aggregate household savings ratio
households accumulated a stock of driven by older consumers’ growing
hides huge disparities in savings by
savings of over £125 billion.17 This confidence on the back of the
households of different incomes.
stock is likely to reach £180 billion by vaccine rollout.20 It is also worth
Survey evidence suggests that the
the middle of 2021.18 noting that the majority of these
large stock of excess savings is
excess savings have been held in
concentrated with higher income
liquid form – as shown in Figure 1.17,
households and retirees, while
around two-thirds of people plan to
lower income households and
hold it in a bank account. This
unemployed persons were more
means it can easily be accessed
likely to have experienced a fall in
and run down. Survey evidence also
their savings.22 On the upside,
suggests that vaccinated people are
retired households, boosted by
more likely to intend to increase
their earlier vaccines, could spend
their spending, with 27% of
more of their savings and sooner.
vaccinated respondents to a Bank
On the downside, higher income
of England survey reporting a plan
households tend to spend less
to increase spending, compared to
from any extra savings they
20% of non-vaccinated. This means
accumulate and could be more
that as the UK’s vaccination
likely to use their savings for other
programme continues at pace, we
purposes, such as investing or
can expect more excess savings to
buying a property. In addition,
be run down.21
lower income households may also
be looking to restore lost savings
17
BoE, Monetary Policy Report, February 2021 – link
over the last year by increasing
18
OBR, Coronavirus and the flow of funds, March 2021 – link
precautionary savings and delaying
19
BoE, Monetary Policy Report, May 2021 – link
spending.
20
PwC, Consumer Sentiment Survey Spring 2021, March 2021 – link
21
Bank of England, How have households’ spending expectations changed since last year? June 2021
22
Bank of England, Monetary Policy Report, February 2021 – link
18 UK Economic OutlookFigure 1.12: Planned use of funds among households with increased savings, %
Hold in a bank
account
Spend it
Pay off debts
Put a deposit
on a property
Invest in financial
products
Fund home
improvements
Gift it
Top up pension
Other
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
2020 H2 2021 H1
Source: Bank of England
Figure 1.13: Percentage of households reporting changes in their savings, %
Unemployed
Low-income
employed
Middle-income
employed
Retirees
High-income
employed
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Savings decreased Savings increased
Source: Bank of England
UK Economic Outlook 19Risks to recovery: Figure 1.14: Monthly average amount outstanding of total sterling notes
and coin in circulation, sterling millions, seasonally adjusted
New variants could drag on the
recovery in the medium term: While 100
there has been evidence that some
vaccines are effective against the new 90
variant, the extent to which they can
protect against the current and future 80
variants remains uncertain. This
70
uncertainty and possibility of further
delays in lifting restrictions would
60
weigh down on growth. Regional
recoveries in the North West and East 50
of England could lag behind following
an early uptick in Delta COVID cases.23 40
This could restrain long term growth
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
and hold back the recovery, with
potential implications for the levelling Source: Bank of England
up agenda.
Long-term economic scarring: There Equity market volatility: Over the
Trade challenges: The strength of the are two main ways economic scarring past year, liquidity within the global
post-covid recovery of the UK’s trading could occur following the pandemic. economy has been rising. This has
partners will likely shape future First, the stock of human capital could largely been driven by the significant
demand for the UK’s imports and shrink as a potential rise in amounts of excess cash, on aggregate,
exports. Weak growth in the Eurozone unemployment leads to an increase in that households have accumulated due
could extend the time from Q1 2020 economic inactivity and a reduction in to postponed spending and also
where the value of non-EU total trade the skills of the workforce. Second, the policies such as the US stimulus
in goods exceeds EU-trade in goods. stock of physical capital could fall as checks. In Figure 1.14, the amount of
The timeline for when UK-EU could businesses reduce or delay investing. money in circulation in the UK has
return to pre-pandemic levels is Both would limit the level of output the jumped up since the start of the
unclear, with many businesses economy can sustainably produce. pandemic. With additional money in
continuing to experience challenges The Bank of England estimates that the the bank, people have been looking to
with the new trading arrangements, supply capacity of the economy will be make greater returns – against a
especially structural issues caused by 1.25% lower by the end of 2024.24 backdrop of record low interest rates
long term trading barriers with the EU – and investing in equity markets and
Young people will likely bear the brunt cryptocurrency. This has been a driver
(see Box B). However, there are some
of long-term scarring to the labour behind the V-shaped recovery in many
countervailing forces that favour
market. They tend to be over- stock indices, including the FTSE 100
growth in UK-EU trade. Short-term
represented in the sectors with the in Figure 1.15.
disruption to UK-EU trade is likely to
weakest job recovery prospects (like
diminish as traders adapt to the new
hospitality, leisure and retail) and There is a risk that the volume of spare
paperwork. The UK’s trade deal with
under-represented in the sectors which cash going into equities markets is
the EU and countries such as Australia
are likely to see the strongest job overinflating it, which risks causing
and Japan will likely dampen the
growth (like professional and scientific volatility and a potential bubble. In the
impact on trade from leaving the UK.
occupations). Young people without lead up to 2008, the extent of liquidity
But trading on WTO terms could lower
higher level qualifications will likely be in the market was a contributing factor
the UK’s competitiveness and push up
hardest hit in the future, as demand for to the global financial crisis. The
the price of imports, the latter of which
employees with lower-level potential for another bubble would
have already increased due to a spike
qualifications is expected to decline in harm the UK’s economic recovery and
in global shipping costs.
the long term. Without government lead to many households losing some
support with upskilling and to help of their excess savings.
young people enter the workforce,
there is a risk that scarring could
increase and hamper the long-term
recovery.
23
Public Health England (PHE), Confirmed cases of COVID-19 variants identified in UK, June 21 – link
24
Bank of England Monetary Policy Report, May 2021 – link
20 UK Economic OutlookFigure 1.15: FTSE100 index On the other hand, there are many
reasons to believe that this time is very
8,000
different from the global financial
7,500 crisis. Firstly, the liquidity in the lead up
to the global financial crisis was
7,000 financed by excessive borrowing; this
6,500
time, it's financed by excess savings
and from cash in people’s bank
6,000 accounts. Figure 1.16 shows that, on
aggregate, consumers are continuing
5,500
to pay off more credit than they are
5,000 taking out.
4,500 Secondly, markets are not at record
highs. For example, the FTSE 100
4,000 index is around 10% below its peak in
2018. This suggests that the amount of
3,500
money going into the equity market is
3,000 not yet at the stage where we should
1996
1997
1998
2000
2001
2002
2003
2004
2005
2007
2008
2009
2010
2011
2012
2014
2015
2016
2017
2018
2019
2021
worry unduly about a bubble.
Source: Yahoo Finance
Figure 1.16: Consumer credit flows, £ millions
4,000
2,000
0
-2,000
-4,000
-6,000
-8,000
Jan-2018
Feb-2018
Mar-2018
Apr-2018
May-2018
Jun-2018
Jul-2018
Aug-2018
Sep-2018
Oct-2018
Nov-2018
Dec-2018
Jan-2019
Feb-2019
Mar-2019
Apr-2019
May-2019
Jun-2019
Jul-2019
Aug-2019
Sep-2019
Oct-2019
Nov-2019
Dec-2019
Jan-2020
Feb-2020
Mar-2020
Apr-2020
May-2020
Jun-2020
Jul-2020
Aug-2020
Sep-2020
Oct-2020
Nov-2020
Dec-2020
Jan-2021
Feb-2021
Mar-2021
Apr-2021
Credit cards Other loans and advances
Source: Bank of England
UK Economic Outlook 21Sectoral outlook
We expect most sectors to return to growth in 2021, but lingering effects of the pandemic are expected on some sectors,
such as accommodation and food service activities, and arts, entertainment and recreation, where restrictions, spending
pattern changes and consumer caution could weigh down on recovery (see Figure 1.17).
Figure 1.17: Projected GVA growth by industry sector, % annual change, 2021 and 2022
Quick recovery scenario
22.7%
Human health and social work activities
8.7%
18.5%
Activities of households
9.0%
15.6%
Construction
8.4%
8.8% Education
4.8%
7.2% Professional, scientific and technical activities
4.1%
7.2% All industries
5.5%
5.9% Manufacturing
1.7%
5.5% Transportation and storage
2.3%
4.5% Information and communication
3.2%
3.7%
Electricity, gas, steam and air
1.2%
3.1%
Water supply, sewerage, etc.
1.0%
2.5%
Administrative and support service activities
1.2%
2.0%
Wholesale and retail trade; repair of motor vehicles
2.8%
1.0% Financial and insurance activities
0.5%
1.0% Public administration and defence
0.1%
0.4%
Real estate activities
1.0%
-1.7%
Agriculture, forestry and fishing
4.9%
-3.3%
Arts, entertainment and recreation
10.4%
-3.5%
Mining and quarrying
2.1%
-9.3%
Other service activities
13.5%
-15.4%
Accommodation and food service activities
31.1%
-20% -10% 0% 10% 20% 30% 40%
2021 2022
Source: PwC analysis
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