Economy ‘will remain weak after lockdown is lifted’, warns Bank of England
The Bank of England has cautioned that even if the Covid-19 lockdown is lifted the economy will remain weak.
Deputy governor Ben Broadbent said told businesses up and down the country that the early evidence from China ‘showed that consumption has remained subdued’.
The shift down in demand in the economy ‘could be persistent’ and ‘that would be important’ when setting interest rates.
Deputy Bank of England governor Ben Broadbent said told businesses up and down the country that the early evidence from China ‘showed that consumption has remained subdued’
He said that in the UK, certain areas of economic activity ‘have ceased or been curtailed even though there is no formal requirement to do so’ adding: ‘Construction is one of them.’
Broadbent did not dispute the Office of Budget Responsibility’s forecast of a 35 per cent decline in output in the April to June quarter of the year.
He appeared less confident about the OBR forecast of a benign recovery later in the year.
He said the goal of public policy was to ensure the lockdown translate into large scale unemployment.
‘We will track the scale and duration of unemployment and business failures’ but it may be two to five years before it is really known.
Looking ahead he dismissed fears that the combination of loose budgetary policy, low interest rates and the Bank’s £200billion of extra quantitative easing might lead to rising inflation.