Two cheers for the British Wirtschaftswunder.
It may not be an economic miracle, but the accelerating recovery now underway is a breathtaking turn of fortunes for the much denigrated Brexit economy.
The UK will probably regain pre-COVID levels of output before the eurozone, perhaps by Christmas.
By the end of next year, it may even have recouped the entire cross-Channel gap in growth since the referendum.
Philip Shaw from Investec has penciled in blistering growth of 7.3 percent this year. But says it could be over 8 percent.
“We’re trying not to sound outrageous, but that is what the numbers are telling us,” he said.
The firm has the eurozone pegged at 4.4 percent.
Upgrades are pouring in. The Swiss bank UBS has raised its UK forecast from 3.8 percent to 5.5 percent.
Bank of America and Barclays have both raised theirs to 5.9 percent.
A “very optimistic” Goldman Sachs is eyeing 7.1 percent, thanks to early and rapid vaccination.
The US bank says press alarmism about a 1.3 million exodus of EU nationals fleeing London is nonsense.
“The true net outflow of migrants is closer to the 200,000 marks,”
It predicts that many will return soon because jobs are scarce at home. Migrants from Hong Kong will do the rest.
“Everybody has been too bearish on the UK,” said David Owen from Jefferies.
“It is going to be a ‘coiled spring’ recovery, and we even think the UK will outperform the US in 2022 with 7.6 percent growth.”
Mr. Owen says a powerful inventory cycle is about to kick in as firms restock.
This will be turbocharged by £100 billion ($178 billion) of excess savings built up by companies over the pandemic.
It will be further juiced by investment tax incentives that reduce the effective marginal rate on plant machinery to zero for the next two years.
Early evidence from the torrid pace of new business formation suggests that the UK is a step ahead of Europe.
This is in exploiting smart data technology. And will be a leader of post-COVID innovation.
Europe will rebound, too, eventually. There is €500 billion ($771 billion) in pent-up household savings waiting to be spent.
But vaccination paralysis in December and January is inflicting its long-tail damage today.
April has turned into a lockdown wipe-out. Virologists in Germany, Italy, and France say politicians are fooling themselves in thinking they can reopen fully in May.
The erratic on-again, off-again treatment of the AstraZeneca jab. It delays the final reopening by yet another month due to the slow rollout and damage to vaccine confidence.
The EU is now trapped by its zero-tolerance policy on rare blood clots.
As if it had the luxury of treating vaccines like a routine drug when 3000 Europeans a day are dying from COVID. The disease itself causes many blood clots.
It has poisoned the well for Johnson and Johnson’s viral vector jab as well.
Capital Economics says the 55 million doses of J&J scheduled for the second quarter amount to 25 percent of the EU capacity to immunize (given the one-shot effect).
The promise of 50 percent adult herd immunity by July is slipping away.
And so is the second summer season for Club Med, with all that this means for pent-up insolvencies and sovereign debt ratios already stretched to the limit.