Economy ‘on course for V-shaped recovery’
BRITAIN’S economy is on track for a sharp V-shaped recovery thanks to a fasterthan-expected rebound, but “considerable” risks remain, according to the Bank of England’s chief economist.
Andy Haldane, who also sits on the Bank’s interest rate-setting committee, said the recovery in the UK and globally had come “sooner and faster” than expected.
In a webinar speech yesterday, Mr Haldane said the UK economy was benefiting from a rebound in consumer spending since lockdown restrictions have begun to ease.
He said: “It is early days, but my reading of the evidence is so far, so V.”
He added: “The recovery in both the UK and global economies has come somewhat sooner, and has been materially faster, than in the Monetary Policy Committee’s May Monetary Policy Report scenario – indeed, sooner and faster than any other mainstream macroeconomic forecaster.”
But he said there was the risk of a “vicious cycle” in the economy if unemployment proves to be higher than expected and warned against a return to the mass youth unemployment seen in the 1980s.
He said: “Risks to the economy remain considerable and two-sided.
“Although these risks are in my view slightly more evenly balanced than in May, they remain skewed to the downside.
“Of these risks, the most important to avoid is a repeat of the high and longduration unemployment rates of the 1980s, especially among young people.”
His comments come after the Bank recently said it now expects gross domestic product to tumble by 20% in the first half of the year, which is far less than the 27% it predicted in its May forecast.