This is a crucial week for the economy – but the Indian variant of Covid-19 has clouds forming on the horizon

Is the burst of inflation we are likely to see in the next few weeks permanent or temporary? This is really important for policy, writes Hamish McRae

Swabs from a Covid-19 test being collected in Bolton (Getty Images)

A big reopening of the UK economy, or a fizzle and a flop? This will be a crucial week in the march back to normality – a week that will tell us lot about how quickly and how safely the world can get back to business as usual, and how the new normality may be rather different to what we remember from those distant pre-lockdown days.

Until a few days ago we could all see a fairly clear path ahead. The UK government had plotted the progressive reopening of shops, restaurants and offices as the vaccines were rolled out and infections fell. Foreign travel lay ahead. Other governments around the world were doing much the same, with the US leading the way. You could argue about the tactics and the detail but we could all see the way the world economy would develop through the rest of this year.

Now some clouds have returned. It is not just that the latest Covid-19 variant that originated in India has brought new uncertainties, though it has surely done that. There is also a reluctance to return to established patterns, for example of commuting and of shopping. And while most of us get back to meeting our friends and families we won’t know how real things will feel until we do so.