Britain’s economy shrank by 20% in the three months to June which was the biggest fall of any large advanced economy according to the Governor of the Bank of England Andrew Bailey.
His remarks come as tighter coronavirus restrictions are imposed across the UK with mass unemployment approaching when furlough schemes come to an end.
Mr Bailey warned that there is significant risk of economic growth continuing to be lower than expected.
The governor told an online event on Sunday that he expected output at the end of the third quarter to be 10% lower than the end of 2019.
“Of course, that is heightened now by the return of Covid… the risks remain very heavily skewed towards the downside,” he said during the video conference for central banks, which was hosted by the Group of Thirty, a panel of economic policymakers and senior bankers.
He also talked about the controversial debate over setting negative interest rates, which would bring the cost of borrowing below zero.
“Our assessment of negative interest rates, from the experience elsewhere, is that they probably appear to work better in a more wholesale financial market context, and probably better in a nascent economic upturn.”
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