Rapid pace of U.K.’s COVID-19 vaccine rollout offers hope for economic recovery

On Thursday, the Bank of England (BOE) projected long-term optimism for the country’s economic recovery, saying that GDP is expected to “recover rapidly” toward pre-COVID levels over the course of this year, as the vaccination program led to an easing of restrictions.

The BOE also added that it would prepare to set negative rates within six months, but that it expected the economy would improve enough that such a move wouldn’t be necessary. The pound rose, and bonds fell on the news.

The Bank of England’s forecast added to rare upbeat sentiment among analysts over the past week regarding the U.K.’s prospects, largely owing to the speed of the rollout, far quicker than that of the EU, which has struggled to ramp up the pace of vaccinations.

“There’s not been a great deal to celebrate in the U.K. over the past few months,” said James Smith, an economist at ING, in a note.

The rollout has been turbocharged by the U.K.’s early procurement of vaccine doses—including the homegrown Oxford University and AstraZeneca jab—and a controversial decision to vaccinate as many people as possible with the first dose, leaving the second dose for as long as 12 weeks after.

That has allowed the U.K. to give at least one dose to 10 million people as of this week, and has put it on track to reach the ambitious target of providing a dose to every person above age 70—as well as to frontline health care and social workers, and extremely clinically vulnerable people—by mid-February. Those groups collectively account for 88% of COVID-19 deaths, the government said.

That means that 15% of the British population has received at least one dose, according to Bloomberg’s vaccine tracker, although only 0.7% have received two doses. The country with the fastest rollout is currently Israel, which has fully vaccinated nearly 21% of its population.

The gamble to delay the second dose to 12 weeks with little clinical evidence—against the advice of the drugmakers and many scientists—also appears to be paying off. On Wednesday, scientists at the University of Oxford who pioneered the AstraZeneca vaccine reported data that showed waiting for 12 weeks to give the second dose of the vaccine conferred better overall immunity than giving a second dose sooner. The first dose of the vaccine also reduced transmission by two-thirds.

“Anyone who is saying what the U.K. has achieved with the vaccine rollout is not good enough needs to identify what they would have done differently,” said Keith Neal, professor emeritus of the epidemiology of infectious diseases at the University of Nottingham, in a note.

The success of the vaccine rollout stands out against a bleak few months in the U.K. The country is one month into its third nationwide lockdown in less than 12 months, spurred by a fast-spreading variant it has now exported around the globe. More than 100,000 people have died, and it has the highest per capita death toll of any large country, according to John Hopkins’ mortality analyses.

That has exacted an economic cost. Despite a historic economic program rolled out to underpin wages and help businesses, the country is also facing its worst recession in over 300 years, exacerbated by a chaotic departure from the EU, which has produced costly paperwork and delays and even required some businesses to set up new offices in the bloc to continue operating.

But the pace of the British vaccine rollout could now give the country a jump on both the U.S. and the EU. The U.S. has given 8.5% of its population at least one shot; while France and Germany are each at around 2.5%.

The U.K.’s success long term is not guaranteed, however, and scientists and economists say the major threat is yet more mutations to the virus.

As analysts at Berenberg noted, U.K.-style surges driven by faster-spreading variants “hang like a Damocles sword above every country.”