DAVY VIEW

Friday’s UK PMI surveys reinforced our view that the UK economy is bouncing back faster than the current consensus expects and that GDP will grow by 6.7% in 2021. The bounce-back was attributed to pent-up demand and the easing of COVID-19 restrictions, particularly the partial re-opening of the hospitality sector. However, price pressures are building faster too. Input and output prices in manufacturing rose at a fresh record high, with services sector firms also noting wage pressures.