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BDO LLP | RETAIL FORECASTS REPORT 2021
RETAIL CATEGORY GROWTH FORECASTS CONTINUED
ECONOMICOUTLOOK Ongoing regional lockdowns means that GlobalData forecasts that the UK economy will not recover to pre-pandemic levels until mid-2023. Following falling consumer sentiment and business restrictions, GDP is expected to decline by 10.3% in 2020, with a slow recovery in 2021 and 2022 as investors remain cautious. Meanwhile, unemployment is likely to rise rapidly towards the end of 2020, even with the re-introduction of the furlough scheme, as businesses fail and are forced to cut costs to survive. After cutting the rate twice in March (from 0.75% to 0.1%), rumours continue to circulate that the Bank of England may take the unprecedented step of pushing the interest rate below the 0% mark, with consumer spending still significantly lower than prior to the pandemic. However, there is growing evidence that lowering interest rates further will fail to increase consumer spending, diverging away from traditional economic theory; despite the interest rates cut in March, the savings ratio soared to 31.8% in the following quarter (Q2).
GDP growth by year
6.0
2.9
1.7 1.7 1.3 1.3
1.9 1.8 1.7
-10.3
2016 2017 2018 2019 2020 2021 2022
2023
2024
2025
Source: ONS, GlobalData
Unemployment ratio by year
Interest rates by year
6.5
1.25
1.00
4.9
4.8
4.6
4.4
4.4 4.2
4.3
4.1
3.8
0.75
0.60
0.50
0.40
0.29
0.25
0.23
0.10
2016 2017 2018 2019 2020 2021 2022
2023
2024
2025
2016 2017 2018 2019 2020 2021 2022
2023
2024
2025
Source: ONS, GlobalData
Source: ONS, GlobalData
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