This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.bbc.co.uk/news/business-52566030
The article has changed 13 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| Bank of England warns of deepest recession on record | Bank of England warns of deepest recession on record |
| (32 minutes later) | |
| The Bank of England has warned that the coronavirus pandemic will push the UK economy towards its deepest recession on record. | The Bank of England has warned that the coronavirus pandemic will push the UK economy towards its deepest recession on record. |
| It said the economy was on course to shrink 14% this year, based on the lockdown being relaxed in June. | It said the economy was on course to shrink 14% this year, based on the lockdown being relaxed in June. |
| Scenarios drawn up by the Bank to illustrate the economic impact said Covid-19 was "dramatically reducing jobs and incomes in the UK". | Scenarios drawn up by the Bank to illustrate the economic impact said Covid-19 was "dramatically reducing jobs and incomes in the UK". |
| Policymakers voted unanimously to keep interest rates at a record low of 0.1%. | Policymakers voted unanimously to keep interest rates at a record low of 0.1%. |
| However, the Monetary Policy Committee (MPC) that sets interest rates was split on whether to inject more stimulus into the economy. | However, the Monetary Policy Committee (MPC) that sets interest rates was split on whether to inject more stimulus into the economy. |
| Two of its nine members voted to increase the latest round of quantitative easing by £100bn to £300bn. | Two of its nine members voted to increase the latest round of quantitative easing by £100bn to £300bn. |
| The Bank's analysis was based on social distancing measures being gradually phased out between June and September. | The Bank's analysis was based on social distancing measures being gradually phased out between June and September. |
| The Bank's scenario showed the UK economy plunging into its first recession in more than a decade. The economy shrinks by 2.9% in the first quarter of 2020, followed by an unprecedented 25% decline in the three months to June. | The Bank's scenario showed the UK economy plunging into its first recession in more than a decade. The economy shrinks by 2.9% in the first quarter of 2020, followed by an unprecedented 25% decline in the three months to June. |
| This would push the UK into a technical recession, defined as two consecutive quarters of economic decline. | This would push the UK into a technical recession, defined as two consecutive quarters of economic decline. |
| Rebound | |
| For the year as a whole, the economy is expected to contract by 14%. This would be the biggest annual decline on record, according to Office for National Statistics (ONS) data dating back to 1949. | |
| It would also be the sharpest annual contraction since 1706, according to reconstructed Bank of England data stretching back to the 18th Century. | It would also be the sharpest annual contraction since 1706, according to reconstructed Bank of England data stretching back to the 18th Century. |
| While UK growth is expected to rebound in 2021 to a record 15%, the size of the economy is not expected to get back to its pre-virus peak until the middle of next year. | While UK growth is expected to rebound in 2021 to a record 15%, the size of the economy is not expected to get back to its pre-virus peak until the middle of next year. |
| The UK government is expected to start easing lockdown restrictions next week. | |
| However, the Bank assumes job losses and shrinking pay packets will continue to weigh on the recovery, with British families remaining cautious about shopping and socialising for at least another year. | |
| It also assumes: | |
| Average weekly earnings are expected to shrink by 2% this year, reflecting the fall in wages for furloughed workers. | |
| The Bank said sharp increases in benefit claims are "consistent with a pronounced rise in the unemployment rate", which is expected to climb above 9% this year, from the current rate of 4%. | |
| The Bank warns that this is not a typical forecast and that "many other scenarios are plausible". But these numbers provide the sharpest analysis yet of the economic challenge of the virus and its pandemic. | |
| Nonetheless the Bank has chosen to continue with levels of economic stimulus announced last month. The Monetary Policy Committee chose to keep base rates at their record low of 0.1% and its bond buying quantitative easing programme at £645bn. | |
| Two members of the nine-member MPC voted to further increase the funds pumped into the government borrowing market by £100bn, suggesting the Bank may yet do more. |