UK sectoral output

The Covid-19 pandemic has had an uneven impact on the sectors of the UK economy, resulting in a large fall in output from industries like hospitality and education, while agriculture and utilities seem to have been largely unscathed. While the first national lockdown hit the whole economy, subsequent lockdowns affected mainly the private nontraded sector, which remains some 20 per cent below its February 2020 level. As the economy re-opens and consumer confidence returns on the back of the successful vaccination programme, we expect a strong recovery in consumption expenditure starting from the second quarter, with positive spillovers to industries like manufacturing, private traded services and construction. The tourism and hospitality sectors may continue to suffer for as long as international travel remains subdued. We project that manufacturing output will rise by 3.75 per cent this year and by 4.25 per cent next year. However, the private non-traded sector is likely to see its output increase by 9 per cent this year after its pandemic-induced 14.75 per cent fall last year. We forecast employment to decline by 190,000 in the private non-traded services sector and by 105,000 in the private traded services sector by the end of the year when the furlough scheme ends. In the longer run, we expect employment patterns to shift from private non-traded services sector to construction and the public sector.