Stock markets in Europe rose on Thursday as Deutsche Bank upgraded its growth forecasts for the UK economy following a revision from the Office for National Statistics (ONS) on Wednesday.
Deutsche said it expects GDP this year at 6%, up 0.3 percentage points, although its quarterly growth profile through 2021 remains unchanged.
The revision is one percentage point above the Bank of England's February projection and 1.3 percentage points above the latest consensus reading from Bloomberg.
"Given the lower base and faster roadmap out of lockdown (with all restrictions expected to drop by 21 June), UK output is now poised to grow a lot faster than its peers in 2021," the lender said.
It added: "Beyond H1-2021, we remain more cautious on the outlook. We still see growth slowing as structural headwinds start to crystalise from unwinding employment support to some Brexit effects more clearly coming through on the supply side.
"Some temporary scarring is also likely beyond summer with households and businesses adjusting to a 'new normal' in terms of social consumption and working practices, which we expect will soften growth marginally through late Q3 and Q4."
On Wednesday the ONS confirmed that the UK economy grew slightly more than expected in the final quarter of 2020. The UK economy expanded by 1.3% in the final three months of last year, up from an initial estimate of 1% growth.
Third quarter growth was also revised up slightly, while the ONS downgraded its estimate for the second quarter. The stats body said the economy contracted by 19.5% between April and June last year during the first national lockdown, which was worse than first forecast.
The data means the UK economy shrank by 9.8% in 2020, which was broadly unchanged from an initial estimate of a 9.9% slump. 2020 marked the worst annual GDP slump in 300 years as COVID-19 brought the country to a standstill. The economic damage felt in the UK outpaced the impact in other developed economies.
It also came after French president Emmanuel Macron announced his decision to impose a four-week nationwide lockdown from Saturday in a bid to control infection numbers, hospitalisations and deaths in the country.
“The main concern is he may well have left it too late after 59,038 new infections were reported yesterday, and with so much vaccine scepticism across the country, particularly over the AstraZeneca (AZN.L) Oxford jab, as well as the rest of Europe, it’s hard to see and end point to the current crisis in Europe,” said Michel Hewson of CMC Markets.
"The Dow was flat as trading got underway Stateside, gaining little to nothing from Joe Biden’s big infrastructure plan announcement yesterday," Connor Campbell of SpreadEx said.
"The reason behind the milquetoast market reaction to the infrastructure plan may be the same thing that caused a flurry of worry around the American Rescue Plan – bond yields. The US 10-year Treasury yield is lurking at or near a 14-month high and rose oh so slightly in the aftermath of Biden’s announcement."
President Joe Biden announced on Wednesday night a $2.3tn (£1.6tn) US infrastructure spending plan on Wednesday, which is on top of the $900bn that came at the beginning of the year.
Biden said his new spending package was a "once in a generation investment in America unlike anything we’ve done since we built the interstate highway system and the space race decades ago."
"This is not a plan that tinkers around the edges," he said in his speech in Pittsburgh, Pennsylvania, where he launched his campaign two years ago.
The proposal, dubbed the American Jobs Plan, would direct billions to initiatives such as charging stations for electric vehicles, eliminating lead water pipes and tackling climate change, as well as modernising some 20,000 miles of roads and repairing crumbling bridges.
Subject to approval by Congress, the spending would be rolled out over eight years.
WATCH: Biden sets out 'once-in-a-generation' $2tn infrastructure plan
Asian stock markets took their cue from Wall Street overnight after Japan and South Korea reported unexpectedly strong economic data.
Japan's quarterly Tankan survey found business conditions improved more than forecast and South Korea reported higher March export growth.
Market benchmarks in Shanghai, Tokyo, Hong Kong and Sydney advanced.
Asia-Pacific released a lot of data today, including Japan’s latest Tankan survey. Most of it was positive,” Robert Carnell of ING said.
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