Bank of England: UK economy could shrink 30% in first half of 2020

LONDON: The Bank of England has warned that the British economy could shrink by 30% in the first half of the year as a result of the coronavirus pandemic.

The scale of the decline came as the bank’s Monetary Policy Committee announced Thursday it had decided to keep its main interest rate unchanged at the record low of 0.1% and opted against a further expansion of its bond-buying program.

In a statement accompanying its policy decisions, the bank said U.K. GDP is set for a “very sharp fall” in the first half of the year and a there will be a “substantial increase” in unemployment beyond those workers who have been retained by their companies as part of the government’s Job Retention Scheme.

Overall, it said that the British economy could shrink by 14% this year, but that depends on how long the current lockdown restrictions remain in place.

Two of the nine policymakers wanted to increase the bank’s stimulus program by another 100 billion pounds ($124 billion).

The bank said that the timeliest indicators of U.K. demand have generally stabilised at very low levels in recent weeks, after unprecedented falls during late March and early April. And payments data point to a reduction in the level of household consumption of around 30%.

It also said that consumer confidence has declined markedly and housing market activity has practically ceased. Companies’ sales are expected to be around 45% lower than normal in the second quarter of the year, with business investment 50% lower.

Source Article

Lois C. Ferrara

Next Post

Vizag gas leak: Andhra govt asks people not to panic, launches helplines

Thu May 7 , 2020
Amaravati: The Andhra Pradesh government on Thursday appealed to people of Visakhapatnam not to panic and cooperate with authorities working to bring under control the situation following a gas leak from a chemical plant there. A major leak from a polymer plant near Visakhapatnam impacted villages in a five-km radius, […]