Boris Johnson: Brexit to fix 'broken' UK economy model
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Only seven of the 19 eurozone economies will match their figures from before coronavirus, with Spain, Italy and Portugal set to be at the bottom of the list.
In the eurozone, divergence is also the general trend: 12 of the 19 countries that share the single currency will have to wait until 2022 to return to the GDP they enjoyed just before the pandemic outbreak, according to figures released
Tuesday by the International Monetary Fund (IMF).
As after the Great Recession of 2008 and 2009, these severe differences complicate the task of the European Central Bank (ECB), which in the coming months will face the difficult challenge to normalise its monetary policy and gradually pull back the sails on the very large purchases of public debt that have prevented financial collapse, but taking great care not to hit the countries that stay behind.
None of the bloc’s five largest countries, Germany, France, Italy, Spain and the Netherlands, and none of the southern countries, by far the hardest hit, are on the list of countries that have already recovered.
But the three Baltic countries of Estonia, Lithuania and Latvia, which will not even have to wait until the end of the year to recover all the lost ground, two Central European countries in Slovenia and Luxembourg are among those back on track, alongside Finland and Ireland.
The latter is by far the most striking case: it is the only euro country and one of the 31 IMF member states – less than 20 percent of the total – that did not even see its GDP shrink in 2020.
While its partners struggled, the island excelled with 5.9 percent growth.
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The numbers are equally illustrative in 2020-2021: compared to a contraction of almost two percentage points in the euro area compared to the starting point at the end of 2019, Ireland will close the same period growing by 20 percent.
Southern European countries highly dependent on tourism and services, such as Spain, Italy and Portugal, will hopefully return to pre-pandemic levels of activity in the final part of 2022.
By contrast, Britain’s economy grew in August as the full lifting of coronavirus restrictions boosted events and hospitality.
The Office for National Statistics (ONS) said GDP rose 0.4 percent between July and August in the first full month after all COVID-19 restrictions ended in England on July 19.
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Britons rushing out to festivals, theme parks and events helped see the hard-hit arts, entertainment and recreation sector bounce back with growth of 8.5 percent.
The August rise in GDP means the economy is now only 0.8 percent smaller than it was before the pandemic.
And the data showed further signs that the recovery is easing as global supply chain woes take their toll.
Growth in August was lower than expected, while the ONS also downwardly revised its estimate for July to a contraction of 0.1 percent from the 0.1 percent expansion reported previously.
The economy will also need to soar by 2.1 percent in September to remain on track with the Bank of England’s forecast for overall growth of 2.1 percent in the third quarter.
Separate data from the ONS on Wednesday showed the UK’s total trade gap widened to £3.7 billion in August from £2.9 billion in July.
But the data suggested the impact of Brexit on trade between the UK and Europe is easing.
While imports from non-EU countries were still higher than those to the bloc in August, the gap was the narrowest since Brexit on January 1.
Imports of goods from the EU were down £100 million in August, the ONS said, with total imports falling £1.3 billion.
British exports of goods also fell by £1.3 billion, with exports to the EU down 4.3 percent but by a greater 5 percent to non-EU countries.
Additional reporting by Maria Ortega
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