UK economy on course to grow by 6.5% in 2021 - Sunak

[October 27, 2021]   LONDON (Reuters) -Britain's economy is on course to grow much more quickly in 2021 than predicted earlier this year, finance minister Rishi Sunak said as he began a budget speech on Wednesday, potentially paving the way for higher spending by the government.

Britain's Chancellor of the Exchequer Rishi Sunak holds the budget box as he poses with his treasury team outside Downing Street in London, Britain, October 27, 2021. REUTERS/Peter Nicholls

Sunak, announcing forecasts drawn up by the Office for Budgetary Responsibility (OBR), said the economy was likely to grow by 6.5% in 2021, faster than a forecast of 4.0% made in March when Britain was still under a coronavirus lockdown.

Since then, the country has moved ahead with its COVID-19 vaccination programme and lifted restrictions on the economy.

"Today's budget does not draw a line under COVID. We have challenging months ahead." Sunak said in a speech to parliament. "But today's budget does begin the work of preparing for a new economy post-COVID."

The forecast was close to the International Monetary Fund's estimate that British gross domestic product will grow by 6.8% in 2021, the fastest among Group of Seven nations after the country suffered the sharpest GDP fall in the G7 in 2020.

The OBR forecast that gross domestic product would grow by 6.0%, 2.1% and 1.3% in 2022, 2023 and 2024, Sunak said.

In March, the OBR had forecast growth of 7.3%, 1.7% and 1.6% over the next three years.

The economy was expected to regain its pre-pandemic size at the turn of the year, compared with the forecast made in March of the second quarter of next year.

Sunak also said the OBR had reduced its forecast for "scarring" of the economy to 2% from a previous estimate of 3%.

(Reporting by David Milliken and Paul Sandle; Writing by William Schomberg; Editing by Hugh Lawson)

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