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| Version 1 | Version 2 |
|---|---|
| Downturn less severe than feared - Bank of England | Downturn less severe than feared - Bank of England |
| (32 minutes later) | |
| The UK economy faces a less severe downturn but slower recovery from the coronavirus pandemic, according to the Bank of England. | The UK economy faces a less severe downturn but slower recovery from the coronavirus pandemic, according to the Bank of England. |
| It expects the economy to shrink by 9.5% in 2020. | It expects the economy to shrink by 9.5% in 2020. |
| While this would mark the biggest annual decline in 100 years, it compares with an initial estimate of a 14% contraction. | While this would mark the biggest annual decline in 100 years, it compares with an initial estimate of a 14% contraction. |
| However, the Bank warned that the jobs market recovery would take longer as it held interest rates at 0.1%. | However, the Bank warned that the jobs market recovery would take longer as it held interest rates at 0.1%. |
| In its first official forecast since the pandemic hit, the Bank said the recovery had been "earlier and more rapid" than it had assumed in May, reflecting a faster easing of lockdown restrictions. | |
| It said spending on clothing and household furnishings was now back to pre-Covid levels, while consumers have carried on spending more on food and energy than before the lockdown. | It said spending on clothing and household furnishings was now back to pre-Covid levels, while consumers have carried on spending more on food and energy than before the lockdown. |
| However, it said leisure spending and business investment remained subdued, which would weigh on the recovery. | However, it said leisure spending and business investment remained subdued, which would weigh on the recovery. |
| Slower recovery | Slower recovery |
| The Bank said the outlook for growth was "unusually uncertain", It expects the UK economy to grow by 9% in 2021, and 3.5% in 2022, with the economy expected to get back to its pre-Covid size at the end of 2021. | |
| This compares with growth estimates of 15% and 3% respectively, in a scenario set out in May. | This compares with growth estimates of 15% and 3% respectively, in a scenario set out in May. |
| Unemployment is expected to rise "materially" to 7.5% at the end of this year as government-funded support schemes come to an end. | Unemployment is expected to rise "materially" to 7.5% at the end of this year as government-funded support schemes come to an end. |
| Average earnings across the economy are expected to shrink for the first time since the financial crisis. | |
| The Bank's latest forecasts are based on the continued easing of nationwide lockdown measures and a smooth transition to a new EU free trade agreement at the start of 2021. | The Bank's latest forecasts are based on the continued easing of nationwide lockdown measures and a smooth transition to a new EU free trade agreement at the start of 2021. |