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 of England 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%. However, the Monetary Policy Committee (MPC) that sets interest rates was split on whether to inject more stimulus into the economy. The Bank’s analysis was based on social distancing measures being gradually phased out between June and September.
Its latest Monetary Policy Report showed the UK economy plunging into its first recession in more than a decade. The economy shrinks by 3% in the first quarter of 2020, followed by an unprecedented 25% decline in the three months to June. (Source: BBC News)
This would push the UK into a technical recession, defined as two consecutive quarters of economic decline. The Bank said the housing market had come to a standstill, while consumer spending had dropped by 30% in recent weeks. (Source: drawn from BBC News)