The Bank of England has said Britain’s economy is recovering more quickly than initially feared from the coronavirus pandemic as consumer spending rises, despite warning of significant risks to jobs and growth.
Leaving interest rates on hold at a record low of 0.1%, Threadneedle Street said Britain’s economy would shrink by a fifth in the first half of this year as a result of lockdown measures imposed in March. Against a backdrop of rapidly rising job losses across the country, it also warned unemployment would double by the end of the year.
However, it said the early signs for the economy as lockdown measures are gradually relaxed were more promising than it had previously anticipated, as consumer spending bounces back close to pre-pandemic levels.
Suggesting the scale of the shock to the economy could be smaller than first feared, the Bank said it expected GDP to plunge by 9.5% this year – the worst performance in 99 years. Threadneedle Street had previously warned that GDP could collapse by 14% this year in the biggest economic shock for three centuries.