‘Stop being such Chicken Lickens’: Top economist says people need to stop ‘catastrophising’ Covid-19

The Bank of England’s chief economist blasted doom-mongers ‘catastrophising’ the impact of coronavirus today, saying that overly pessimistic view could hold back the recovery.

Andy Haldane cautioned against ‘the economics of Chicken Licken’, a reference to a folk tale about a chicken who worried the sky was falling down.

He said the central bank expects the economy to rebound with ‘vertiginous’ growth of 20 per cent in the third quarter and said the faster-than-expected recovery should not be overlooked.

It came as  revised figures showed that the UK’s economic plunge at the peak of coronavirus lockdown was not quite as bad as thought – but still the worst in modern history.

Official figures for the fall in GDP during the three months to June have been revised down from 20.4 per cent to 19.8 per cent. 

Speaking at an online event today, Mr Haldane said the economy faces an ‘unholy trinity of risks’ from rising Covid-19 cases, mounting job losses and the end-of-year Brexit deadline, but stressed there was a danger of exaggerating the threat they pose.

‘Encouraging news about the present needs not to be drowned out by fears for the future. Now is not the time for the economics of Chicken Licken,’ he said, adding that the speed and scale of the recovery has been ‘fairly remarkable’.

‘The economy began its recovery from this dramatic fall earlier, and has since recovered far faster, than anyone expected,’ he said.

Mr Haldane has been one of the most optimistic over the UK’s economic recovery from the pandemic and insisted in his speech that ‘policy authorities, including the Bank, have a public responsibility to avoid economic catastrophising’. 

But the Office for National Statistics (ONS) has also concluded that UK plc performed worse during the first quarter of the year than previously thought.

The economy contracted 2.5 per cent between January and March, compared to previous estimate of 2.2 per cent.  

Overall GDP is now 21.8 per cent smaller than at the end of 2019 – underlining the threat to millions of jobs as Boris Johnson struggles to balance getting the country back up and running with tackling a rise in cases. 

Separate figures published earlier this month showed GDP went up by 6.6 per cent in July. 

The ONS said: ‘While it is still true that these early estimates are prone to revision, we prefer to focus on the magnitude of the contraction that has taken place in response to the coronavirus pandemic.

‘It is clear that the UK is in the largest recession on record.

‘The latest estimates show that the UK economy is now 21.8 per cent smaller than it was at the end of 2019, highlighting the unprecedented size of this contraction.’