The 2.1% m/m gain in GDP in March added to other evidence that the economy is recovering more rapidly from the COVID-19 crisis than even our above consensus view had suggested. As a result, we have nudged up our 2021 GDP forecast. However, the rapid recovery is raising fears of a surge in inflation, which spooked markets this week. We don’t think inflation will stay at 2.0% until 2023, which means it could be 2024 before the Bank of England tightens policy.
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