The Bank of England predicts that we will face the worst economic downturn since 1709. The institution presented its opinion in its report, which it prepared for the government.
The Bank of England predicts a great crisis
The Bank of England has prepared a report on the UK’s economic outlook. The document was presented at the end of last week to Prime Minister Boris Johnson.
The Monetary Policy Committee (MPC) of the central bank “Developed a probable example economic scenario”, to illustrate the potential impact of the coronavirus crisis on the British economy. It was noted that the current situation is unprecedented, so the economic outlook is “Extremely uncertain.”
According to experts, we can expect the worst period for the economy since 1706. The British economy may shrink by as much as 14 percent. in 2020 alone, while total production will drop by almost 30% in the first half of 2020
The Governor of the Bank of England Andrew Bailey also explained that “lack [rynku] loans would create a vicious circle of more bankruptcies and higher losses (…) which could hit the banks themselves. ” – Continuing lending is a better way for banks – told The Financial Times journalists. – If the system [zapewni dobrą podaż kredytów], we will get a better result – added.
The central bank also predicts that the UK unemployment rate is likely to rise to 9%. in 2021, which means a higher unemployment rate than after the financial crisis of 2008-2009.
The Governor of the Bank of England added, however, that there is also a positive scenario. Economic rebound can occur “Much faster than withdrawal from the global financial crisis.” The central bank assumes that long-term economic damage will amount to only 1.5 percent. gross domestic product. The bank also predicts that the economy may rebound as a result of the sudden V-shaped recovery, unlike the US and global economies.
The bank also said that it is ready to introduce more money into the economy if needed. In March, he pledged to spend as much as £ 200 billion ($ 248 billion) to support business by purchasing government bonds. – This is a very aggressive shopping program … we have made a very clear commitment to do everything necessary to support the economy in line with the inflation targetSaid the governor.
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