It has emerged that the Bank of England (BOE) is set to pump an extra £150bn into the UK economy. Tighter lockdown rules, that come into effect in England from today, are expected to push the UK into another downturn and a slower, bumpier recovery.
While the economy is expected to avoid another recession, due to the measures only being in place for 4 weeks, the BOE fears that unemployment will rise sharply. Interest rates have also been kept on hold at a record low of 0.1%.
Assuming that these new restrictions are lifted on December the 2nd, the BOE has forecasted a 2% economic shrink in the final three months of 2020, before a bounce-back at the start of 2021. However, it does not predict a pre virus economy until 2022.
The first lockdown in March, brought in to deal with the Covid-19 pandemic triggered the sharpest economic contraction on record. As a result of shoppers helping the industry bounce back over the summer, and the BOE has said retail sales remained strong this year.
However, it did not have such rosy news for the hospitality, leisure, and tourism sectors whom it said have “suffered from lockdown rules”. Many diners enticed by the Eat Out to Help Out scheme had stopped once this scheme finished.
Today’s fresh restrictions in England are expected to be a considerable drag on growth and as a result of this the BOE is expecting an 11% economic shrink in 2020 as a whole.
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