The Bank of England predicts gross domestic product will expand by 7.25% in 2021 – marking its strongest rate of growth since official records began in 1949
The economy is expected to expand by 7.25% this year, with extra government cash for workers and businesses helping to limit job losses.
This would be the strongest growth since official records began in 1949.
However, it comes after the economy shrank almost 10% last year in the sharpest drop in 300 years.
Bank policymakers also held interest rates at a record low of 0.1%.
The Bank expects the recovery to gather pace as the reopening of high streets paves the way for a mini-spending boom.
The UK’s rapid vaccine rollout is expected to support consumer confidence, with the economy expected to get back to its pre-pandemic size before the end of the year.
Andrew Bailey, the governor of the Bank of England, compared the rapid expansion to the growth seen during the Industrial Revolution two centuries ago, when factories started using new manufacturing processes.
“I don’t think we’ve had a bounce-back quite of this nature, certainly in modern times,” he said.
While Mr Bailey cautioned that the surge in output would only return the UK economy back its 2019 size, he added: “Given what the economy has been through, it is good news.”
It’s widely agreed among forecasters that the UK economy will expand this year as it recovers from the coronavirus crisis.
Last year was turbulent for businesses as many spent months at a time closed – but there are hopes of the economy getting back on track thanks to the vaccines programme.
The tough measures saw GDP plunge by 9.8% over the course of the 12 months from January to December last year – the worst in modern records and wiping out seven years of economic growth.
The UK also plunged into its “worst ever” recession in 2020 as businesses continued to be shut down by the pandemic.