At time of writing, the UK’s FTSE 100 index of leading shares is at 6,882 – up 7% on where it ended 2020. In the US the Dow Jones index is up 11% for the year at 33,821 with other major markets around the world also making significant gains in the first four months of 2021.

As the crowds return to the UK high streets and people head back to the office, it is perhaps relevant to ask how quickly the world’s economies – and, by implication, stock markets – will recover over the next 12 months. However, this article does not constitute specific financial planning advice and should not be taken as such.

When Chancellor Rishi Sunak delivered his Budget in the first week of March, he said that the Office for Budget Responsibility (OBR) was expecting economic growth of 4% this year, followed by 7.3% in 2022 – followed by a return to rather more ‘normal’ levels of 1.7%, 1.6% and then 1.7% again in 2025.

Since then we have, of course, seen the UK’s successful rollout of the vaccination programme, which has led to more optimistic forecasts for growth this year. Even a week after the Budget the Governor of the Bank of England was quoted as saying that the vaccination programme could see the UK ‘perform more strongly than expected’ this year.

There is now a general consensus among economists and forecasters that the recovery will be quicker this year, with the average somewhere between 5% and 6%.

In a forecast published in mid-April accountants Deloittes predicted that the UK economy will grow by 5.8% this year, and 5.7% in 2022. Again, depending on which forecast you read, the economy will be back to its pre-Covid levels by the second or third quarter of 2022.

The same firm also surveyed the UK’s Chief Financial Officers recently: 80% think Britain is on the brink of a ‘strong recovery.’ This upswing has helped push expectations for hiring and investment to their highest level for six years, with almost all those responding saying they expect rising profits over the next year.

The signs appear to be good for the UK. What about the rest of the world? China was one of the few countries to see its economy grow in 2020, and that continued in the first quarter of 2021. The country’s GDP was up by 18.3% in the first three months of this year compared to the first quarter of 2020. Overall, China is targeting growth ‘in excess of 6%’ for the whole of 2021.

In the US, President Biden’s $1.9tn (£1.36tn) Covid recovery package – described as a ‘once in a generation spending plan’ – has now been approved, and the figures for March showed the US economy creating 900,000 new jobs as the recovery gathers pace.

Other economies around the world tell similar stories. As stated above, there is no guarantee that economic recovery will translate into rising stock markets, but economically, at least, the worst of the pandemic seems to be behind us and it is not just UK shoppers who are feeling optimistic.