If you’ve been paying attention to headlines in recent months, you may have seen that the coronavirus pandemic has had a significant impact on the UK. In January of 2021, the UK reached the tragic milestone of 100,000 deaths caused by the virus, the highest number in Europe.
However, while the headlines may spell doom and gloom, they don’t show a completely accurate picture. It’s true that the country has struggled in recent months, but there are also many reasons to be hopeful.
Here are some reasons why the UK’s prospects for 2021 are brighter than you may think.
The rate of coronavirus infection in the UK is falling
It can’t be denied that the UK was hit particularly hard by the coronavirus pandemic in 2020. According to official statistics published in the Guardian, the UK suffered one of the worst coronavirus mortality rates in Europe, standing at 151 per 100,000 people.
The emergence of the “Kent strain” of the coronavirus was also a further cause for concern. Mutations in the virus are an issue for medical professionals, and urgent testing of the efficacy of vaccines against new strains of Covid-19 are ongoing.
On the face of it, the situation in the UK is far from ideal, but these facts don’t tell the full story. Despite the country’s previous struggles, it is likely that the UK will be able to recover quickly.
For a start, it is important to note that the rate of infection in the UK is currently falling. According to figures from the Office for National Statistics (ONS), reported by the BBC, the UK’s reproduction, or “R”, figure fell to between 0.7 and 1 in early February.
Experts estimate that the number of infections is falling by between 2% and 5% per day, a strong indication that the situation is markedly improving.
One of the likely reasons for this is the UK’s notably successful vaccination program, which includes both the Pfizer-BioNTech vaccine and that developed by the University of Oxford.
The UK may be the first country to safely end the cycle of lockdowns due to its vaccine success
The Oxford vaccine, produced by the British-Swedish pharmaceutical company AstraZeneca, is the cornerstone of the British government’s plan to control the virus and ease the country out of lockdown.
According to data from trials, published by the BBC, the Oxford vaccine may be up to 90% effective in aiding the body’s natural immune response to the virus.
Furthermore, another benefit of the Oxford vaccine is that it is significantly cheaper and easier to distribute than the Pzifer-BioNTech and Moderna vaccines, as it does not need to be refrigerated at as cold a temperature.
This has allowed the UK government to significantly speed up the process of vaccinating the most vulnerable members of the population. The distribution was also helped by the fact that the two main sites where it is being produced are situated in the UK, ensuring that the supply of vaccine is uninterrupted.
As of early February, over 12 million people have received the first dose of the vaccine, which equates to around a quarter of all UK adults. This is, by a considerable margin, the highest number out of all European countries.
The rapid distribution of the vaccine means it is likely that the UK will be the first country in Europe to be able to safely transition out of lockdown and begin a proper economic recovery.
The end of lockdown may spur a surge of consumer spending
The effects of the pandemic and the subsequent lockdowns have taken a heavy toll on the British economy. However, they have also created the potential conditions for a period of strong growth when the government eases the current lockdown.
During the lockdowns in 2020, the temporary closure of shops meant that the many households reduced their spending. According to insurance provider Aviva, the typical UK household spent around 29% less during the lockdowns than they would have normally.
While this had a negative impact on small businesses, it also provided a significant boost to many people’s savings.
The government’s furlough scheme, aimed at supporting workers and businesses during the lockdowns, also helped to minimise the impact of the pandemic on the public’s financial wellbeing.
A report by the Bank of England, reported in the Telegraph, found that during lockdowns, the public managed to reduce the value of their consumer debts by over £20 billion while increasing their household deposits by £113 billion between January and October.
This boost to savings, and improved financial wellbeing due to lower debts, puts many Brits in a strong position to spend once the government eases the lockdown. When this happens, experts predict there will be a surge in consumer spending.
The negotiation of a trade agreement between the UK and EU in December 2020 was also good news for many businesses. The deal has dispelled many of the previously held fears of international tariffs and also provided a large boost in consumer confidence.
House prices have seen strong growth despite the pandemic
The health of the housing market is a further reason for confidence in the UK economy. In the initial lockdown, house prices saw a slight fall as rules regarding social distancing meant that surveyors and prospective buyers couldn’t access homes that were for sale.
However, once the government lifted the lockdown, several market factors combined to drive a surge of demand. The shift towards remote working, and the prospect of a second lockdown, led many people to re-assess their housing needs.
Furthermore, the government’s implementation of a Stamp Duty holiday gave buyers another incentive to move, as they could save up to £15,000 in tax.
This combination of factors has led to strong growth in house prices. According to a report by Halifax, published in the Guardian, UK house prices grew by 6% in 2020 despite the economic impact of the pandemic.
This strong growth in prices shows that, while the country may have struggled in the last few months, there is still hope for economic recovery and a rapid return to normality.
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