(Bloomberg) — The Bank of England expects the biggest surge in household spending since 1988 — when Margaret Thatcher was prime minister — to help power a strong economic rebound after the pandemic.Officials, led by Governor Andrew Bailey, said they expect consumers to use up 10% of the savings glut built during lockdowns, double the pace previously forecast. The central bank also sees the U.K.’s economic output recouping losses by the end of this year instead of in early 2022.While the BOE on Thursday opted to slow emergency bond buying, in tune with a shift by some global counterparts toward deescalating monetary stimulus, policy makers insisted this isn’t a switch in stance. However, the strength of the recovery did lead outgoing Chief Economist Andy Haldane to cast a sole minority vote to end purchases sooner.The success of the U.K.’s vaccination drive has driven down infection and death rates and allowed the government to stay on track to fully re-open the economy in June. The next stage in the loosening of restrictions is due later this month, when indoor hospitality will open and two households will be able to mix inside.“This growing confidence in the recovery has enabled the bank to cut the weekly pace of its asset purchases,” James Smith, an economist at ING, wrote in a report. While that shouldn’t come as a “huge surprise,” he said “the next question is how –- and when –- the Bank of England will enter a formal tightening cycle.”Officials remain confident that the recovery won’t spur a sustained spike in inflation, although they see the risk of that as more balanced than before.The central bank estimates consumers accumulated more than 200 billion pounds ($278 billion) during the pandemic, more than the 125 billion pounds estimated in November, Deputy Governor Ben Broadbent told journalists at a press conference on Thursday.What Bloomberg Economics Says…“The Bank of England delivered a big forecast upgrade today as well as a slowdown in bond purchases and a dissenting vote from its outgoing chief economist. All of that suggests increasing confidence about the economic outlook.”–Dan Hanson, senior U.K. economist. Click here for full REACT.The figures help explain the BOE’s bullish outlook for economic growth this year after pandemic lockdowns caused the worst recession in three centuries. It now sees the economy expanding 7.25% this year, with unemployment peaking at only 5.4%, rather than 7.8% as previously predicted.“The impact of restrictions on activity appears to have been smaller than anticipated, as households and companies have adapted,” Bailey told reporters.But Haldane, who is set to quit the BOE in June, voted to cut the target for the current round of bond purchases to 100 billion pounds from the present total of 150 billion pounds, meaning the program would finish in August rather than at the end of the year.“There was now clear evidence that the economy was growing rapidly, with both household and company spending surprising significantly and persistently to the upside, and consumer and business confidence bouncing back,” he argued to his colleagues.The BOE did reduce the pace it buys government debt to 3.4 billion pounds a week, 1 billion pounds lower than the previous amount, though officials cautioned not to read too much into that tweak.Still, the more optimistic outlook may put the institution in a vanguard of global central banks starting to contemplate an end to crisis stimulus, reflecting a broader discussion in major economies about how long to keep emergency life support flowing.“The BOE is already positioning itself at the hawkish end of the central bank spectrum,” HSBC Holdings Plc economists wrote in a report. “The Bank of Canada has started tapering, but has no end-date for purchases, while the U.S. Fed is not expected to start tapering until the end of the year.”Vivek Paul, the U.K. chief investment strategist at BlackRock Investment Institute, cautioned that the sunnier outlook isn’t a promise of sustainable expansion over time.“It would be a mistake to extrapolate from eye-watering growth rates inthe near term to stronger growth in the future,” he said. “After all, this is a restart, not a recovery.”(Updates with economists’ comments throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.