Bank of England warns coronavirus crisis will see GDP slump nearly 30 PER CENT in the first half of this year and push the economy to worst recession for 300 YEARS
UK GDP will slump by 14 per cent this year, and the shockwaves from coronavirus will b e felt into 2022, the Bank of England warned today.
In its latest assessment, the Bank said the economy will shrink by nearly 30 per cent in the first half of this year before recovering some ground.
But the impact of the deadly disease will continue to be felt for at least another year afterward. Unemployment could hit 9 per cent before falling back again.
The 14 per cent fall estimated for 2020 would be the biggest recession since the South Sea Bubble around 300 years ago.
Announcing that interest rates have been kept on hold at a record low of 0.1 per cent, Governor Andrew Bailey said it was acting to ease the effects as much as possible.
‘The Bank’s three policy committees have taken complementary actions to lower the cost of borrowing, to put the banking system in a position to lend and to support the functioning of financial markets,’ he said.
Governor Andrew Bailey has unveiled grim forecasts from the Bank of England
In its latest assessment, the Bank said the economy will shrink by nearly 30 per cent in the first half of this year before recovering some ground
In its first official outlook on the toll taken on the UK economy by the Covid-19 pandemic, the Bank cautioned over a ‘very sharp’ fall in GDP over the first half and a ‘substantial’ hike in unemployment.
It said the fall should be temporary and that activity should ‘pick up relatively rapidly’ as lockdown is eased, but added that it would ‘take some time’ for the economy to recover.
The Bank’s nine-strong Monetary Policy Committee voted unanimously to hold rates at 0.1%.
It also kept its quantitative easing (QE) programme to boost the economy unchanged at £645 billion after unleashing another £200 billion of bond-buying in March.
But two members of the MPC voted to increase QE by another £100 billion in a sign that more may be on the way soon.
Rates have already been slashed twice, from 0.75%, since mid-March as part of the Bank’s measures to try and keep the economy afloat during what is expected to be the steepest recession in living memory.