Chancellor Rishi Sunak has said the UK’s rapid Covid-19 vaccine rollout will foster a “swifter and more sustained” economic recovery.
Official forecasts predict the UK economy will grow 4% this year, and get back to its pre-pandemic size six months sooner than previously expected.
An extension of the furlough scheme is also expected to limit job losses.
However, Mr Sunak warned that repairing the long-term damage to the economy “will take time”.
The government’s independent forecaster, the Office for Budget Responsibility (OBR), expects the pace of growth to strengthen to 7.3% in 2022.
This would be the highest growth rate since official records began in 1949 and would help the economy to return to its pre-pandemic size in the middle of next year.
However, borrowing is expected to rise to a peacetime high of £355bn this year to help pay for economic support measures.
Mr Sunak said: “It’s going to take this country – and the whole world – a long time to recover from this extraordinary economic situation. But we will recover.”