Metrics Monthly Q1 | 21

INSIGHT

Bounce back, growth or recession?

CEO David Wylie has said that once vaccinations are well advanced and the lockdown has ended, the economy will bounce back rapidly. But the uncomfortable truth is that many jobs and companies have been lost, which will inevitably have consequences. So we decided to ask YOU what you thought and the results were interesting! When the pandemic hit, we saw eco- nomic growth come to a standstill, and in the first few weeks we witnessed long-lasting damage being inflicted on the economy, with businesses closed, hospitality halted and travel severely affected. UK GDP was 24% lower in April 2020 than it was only two months earlier. Back then, many thought the pandem- ic would be over by Autumn, and the International Monetary Fund predicted the global growth to rebound to 5.8% in 2021, provided the pandemic lost momentum by the second half of 2020.

This failed to happen, however, and the pandemic is still affecting our daily lives now, with the UK in its third national lockdown. At the end of the year in December, GDP was still 6% below pre-pandemic levels and the IMF estimates that across the whole of 2020 the global economy shrunk by 4.4%. They even described the decline as 'the worst since the Great Depression of the 1930s.' This being said, there is now a light at the end of the tunnel, following the Gov- ernment's roadmap to cautiously ease lockdown restrictions in England being announced in late February. With the potential for hospitality and retail to reopen in Q2, the question is: will this result in a strong bounce back of the economy, a steady, on-trend growth or has the damage already been done and are we looking at a crippling recession? Around half of respondents (51%) agreed with CEO David Wylie's predic- tions, who stated that the demand bulge that lenders face will lead to a very big bounce back in the economy and lender activity. According to Mr Wylie, there is

a lot of pent-up spending that will not go away, from holidays to home improve- ments, as people rush to make up for the many months of lockdown. Interestingly, those who didn't vote for a strong bounce back, were largely split between on-trend growth and reces- sion, two very different sides of the coin. 29% of respondents expect on-trend growth throughout the year, and this is reflected in the Coronavirus Economic Impact report published in the House of Commons Library, which states that the average forecast for 2021 predicts a GDP growth of 4.3%. However, every economist current- ly seems to have a different opinion - some expect this pent-up consum- er spending to underpin strong rapid growth, whereas others think that the rise in unemployment and job security will lead to consumers being more cau- tious, and that the increase we may see in spending will not be enough to save us from a recession. This echoes the concerns of the 20% of respondents who voted that they expect another recession in 2021, and those concerns are clearly relevant.

14 | Metrics Monthly

Q1 | 2021

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