Influential United Kingdom think tank, the National Institute of Economic and Social Research is pessimistic about the country’s economic rebound declaring that the economy will remain below its pre-Covid levels until the end of 2023.

This is a more pessimistic outlook than that given last week by the Bank of England. The National Institute of Economic and Social Research have cut its forecast for growth this year to 3.4% down from the 5.9% predicted in October.

This revised projection comes in wake of a 10% slump in the economy in 2020. However, the Bank of England is predicting that Gross Domestic Product (GDP) will return to pre-crisis levels in the first quarter of next year.

With this latest projection and pessimistic outlook by the National Institute of Economics and Social Research, pressure is mounting on the British government to extend support programs that are currently set to wind down next month.

Institute warns of premature end to fiscal stimulus

The institute reports that based on its latest assessment the fiscal stimulus was “money well spent,” arguing that a premature end risks delaying the UK’s economic rebound. Based on latest projections, unemployment is set to climb to 7.5% or a total of 2.5 million people being out of a job by the end of 2021 with inflation staying subdued at 1.3%.

National Institute of Economics and Social Research forecasts

Based on the latest forecast, National Institute of Economics and Social Research is projecting that GDP in the UK could remain below pre-crisis level until the end of 2023. “The forecasts reflect high levels of uncertainty about the path of the virus and the efficacy of vaccines against variants,” stated Hande Kucuk, an economist at the institute.

She explained that the time frame for regaining lost output is consistent with the last big recession.

Bank of England optimistic outlook

Meanwhile, the Bank of England reported last week that the U.K. economy is heading for a rapid pickup in light of a bold vaccination effort, which is a sign that the stifling grip of the coronavirus crisis on growth may finally start to ease. Despite lowering its outlook for the year, the Central Bank of England sounded an optimistic note on its hopes of a powerful rebound.

The bank’s Monetary Policy Committee also kept stimulus in place and agreed as a contingency that banks should prepare for the possibility of negative interest rates. “GDP is projected to recover rapidly towards pre-Covid levels over 2021, as the vaccination program is assumed to lead to an easing of Covid-related restrictions and people’s health concerns,” the Bank of England said in its statement last week.

 According to the UK’s Central Bank, the outlook suggests Prime Minister Boris Johnson’s aggressive immunization push is already bolstering the economy.