Outlook for UK economy is “unusually uncertain” claims Bank of England

Outlook for UK economy is “unusually uncertain” claims Bank of England

The Bank of England has said the outlook for the UK economy is “unusually uncertain” despite the rapid rollout of Covid-19 vaccinations.

Although it said there were reasons to be optimistic, including a drop in growth in January that was smaller than expected and the extension of the furlough scheme, it stated that the recovery of the economy still depends on the “evolution of the pandemic”.

This comes as the Bank of England dropped interest rates to historic lows of 0.1%.

According to official statistics, the UK economy shrank by 2.9% in January in the wake of the third lockdown, as non-essential shops, bars and restaurants were closed to the public.

However, the drop was much smaller than expected, which suggests that businesses have adapted to new styles of trading during the national lockdown.

In addition, the Office for Budget Responsibility (OBR) forecasts that unemployment will peak at 6.5% instead of the 11.9% that was predicted last July.

All this combined has added to growing expectations that the recovery of the UK economy will be stronger than previously expected, primarily due to the Covid-19 vaccine programme.

All adults above the age of 50 and those in risk groups are set to have their first vaccination by the end of May, followed by all adults by the end of July.

On the other hand, an official statement from the Bank’s Monetary Policy Committee (MPC), which is responsible for setting interest rates, was more cautious.

“The outlook for the UK economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remains unusually uncertain,” it said.

“It continues to depend on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments.”


Contact Gi National
Email us: