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Goldman Sachs: Vaccine rollout could spark bumper bounce back for UK

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Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
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Mary Williams, right, receives an injection of the Oxford/AstraZeneca vaccine at the mass vaccination centre in Newcastle Upon Tyne, England, Monday, Jan. 11, 2021.  The centre is one of the seven mass vaccination centres that opened Monday as the government continues to ramp up the coronavirus vaccination programme.  (AP Photo/Scott Heppell)
Mary Williams, right, receives an injection of the Oxford/AstraZeneca vaccine at the mass vaccination centre in Newcastle Upon Tyne, England, Monday, Jan. 11, 2021. Photo: AP Photo/Scott Heppell

The successful rollout of COVID-19 vaccines could drive a strong bounce back in UK and US GDP from the second quarter onwards, according to economists at Goldman Sachs (GS).

The bank said in a note published on Monday that it was expecting a big rebound in economic activity from March onwards as vaccines lead to lower hospitalisations.

“We believe that a vaccine-driven reduction in hospitalizations is likely to kick off the growth rebound through relaxed restrictions and some reductions in voluntary consumer social distancing,” Goldman Sachs said.

Economists said US GDP could grow by 10% in the second quarter of 2021 and a huge 19% in the UK.

WATCH: Hancock: Vaccine rollout 'on track' and now open to over 70s

Latest data from the Office for National Statistics (ONS) showed that UK GDP shrank by an estimated -2.6% in November. Economists had forecast a -5.7% decline. While it fared better than expected in November, experts warned the UK economy was still on track for its first “double dip” recession since the 1970s. Chancellor Rishi Sunak repeated his warning that things “will get harder before they get better.”

Some 3.5 million people in the UK have received at least the first dose of a COVID-19 vaccine, according to government figures. Bloomberg estimates over 14.7 million doses have been administered in the US, based on data from the Centre for Disease Control and Prevention.

The UK is fourth in the world for vaccine doses administered per 100 people, according to University of Oxford compiled data, while the US is just behind in fifth.

Goldman cautioned that there was “large uncertainty” surrounding its predictions, due to unknowns about vaccine distribution, take up of the jabs, and threats from new strains of COVID-19. The pace of vaccine administration in the UK has slowed over the last two days, with ministers blaming supply, while concerns are also growing that new variants of COVID-19 could prove resistant to the vaccine.

Economists said they would “be watching regional and demographic data to detect early signs of vaccine-driven health improvements.”

Goldman’s forecast of bumper growth for the UK matches a bullish call it made before Christmas. Goldman said at the start of December it believed the UK’s economy would expand by 7% in 2021, much higher than consensus.

WATCH: Teachers, shop workers and police could be prioritised in next phase of vaccine rollout