The Bank of England has warned that the British economy could contract this spring by 25 percent and unemployment more than double as the coronavirus pandemic is taking the world to an effective stalemate.
Leaving interest rates on hold as the economic crisis continues, the central bank said that since the onset of the global health emergency and the lockout steps used to curb its expansion, economic activity across the world had dropped short.
Sounding the alarm about the increasing economic loss during the coronavirus epidemic, the Bank said GDP could fall by 14 percent for the whole of 2020.
Bank of England states facts
The nine-member monetary policy committee (MPC) of Thread Needle Street voted overwhelmingly to keep interest rates at 0.1 percent, the lowest point in the bank’s 325-year history, despite two emergency cuts in March at the beginning of the Covid emergency in Britain.
Nevertheless, the rate-setting council was divided in a measure of the severity of the economic crisis. By raising the £645bn quantitative easing stimulus program of the Bank. With two participants calling for an immediate £100bn rise.
In its first monetary policy update since the start of the pandemic. The central bank said debit and credit card payment data revealed a 30 per cent decrease in customer spending. While housing sector development had almost ended.
While it cautioned that Britain faces unprecedented rates of doubt about the development prospects as the government is planning to leave lockout steps. The Bank said that one “plausible illustrative economic scenario” was a 25% GDP decline in the second quarter. With unemployment as much as doubling to around 9%.
Nevertheless, it said the rapid decrease in activity would be transient. Because economic growth would pick up fairly rapidly. Due to social distancing initiatives loosen. However, it cautioned that continued fears about the coronavirus. It would mean that family and company precautionary actions would continue for some time. After strict operation restrictions were removed.