Interactive Investor

UK economy set to grow at fastest rate since World War Two

Interest rates on hold as country set to return to pre-pandemic levels by the end of 2021.

6th May 2021 19:05

Myron Jobson from interactive investor

Interest rates on hold as country set to return to pre-pandemic levels by the end of 2021.

Commenting, Richard Hunter, Head of Markets, interactive investor says: “The accompanying comments from the Bank of England were welcome, with the UK economy poised to return to pre-pandemic levels by the end of the year, made possible by what could be the strongest growth since the Second World War in the meantime.

“In addition, the MPC seems committed to keeping monetary conditions loose, until such time as the economic recovery is entrenched, a policy largely in line with other major central banks.

“Much as the 20% GDP fall in April last year was an exception rather than a direction, this bout of growth signals something of a return to form for the UK but even after the full relaxation of lockdown, this level of growth will probably be limited to 2021.”

Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “Prolonged low interest rates at a time of rising inflation, make it much harder for savings sitting in cash to retain their value. This is a particular problem for older, retired people, who prefer to keep their life savings in lower-risk accounts, because they naturally want to avoid stock market losses.

“The issue of where to keep your money to both preserve capital and keep up with inflation is becoming more pressing – and more challenging – by the minute. For years, it has been a bad time to be a risk-averse retiree trying to keep your life savings safe and it only looks set to get tougher.”

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “It might not be surprising to see the base rate on hold, but it’s still good news for mortgage holders and anyone looking to lock in cheap debt and extend their homes, rather than further fuel a hot property market.

“Savers, though, are still lumbered with miserable rates, forcing many to consider alternative options such as the stock market.

“First-time investors should be looking at a well-balanced global fund, and multi-asset funds that spread risk across different asset classes are a good place to start. And make sure you have at least a few months savings in the bank – preferably six. The UK economy might look set to be on course for its fastest recovery since World War Two, but stock markets never go in a straight line.”

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