In Brief

Explained: Bank of England predicts V-shaped economic recovery

Britain rebounding ‘sooner and faster’ than expected - but unemployment poses threat

The UK economy is on track for a faster recovery from the coronavirus crisis than previous predictions suggested, the Bank of England’s chief economist has said.

“Issuing an upbeat assessment”, Andy Haldane said there were signs of a V-shaped economic recovery - when “growth rapidly snaps back from a steep downturn in activity”, says The Guardian

Data on payments, traffic flow, energy use and business surveys suggested that “the recovery has come somewhat sooner, and has been materially faster” than was forecast in May, Haldane said during a Bank webinar on Tuesday.

“Policymakers and economists have grown increasingly gloomy in the past few months”, warning of “a slow U-shaped recovery, a ‘W’ caused by a second rise in cases, or even an ‘L’, where the recession is prolonged”, The Times reports.

But Haldane said that while it was “early days”, his “reading of the evidence is so far, so V”. 

“Both the UK and the global economies are already well into the recovery phase,” he continued. “The UK’s recovery is more than two months old.”

–––––––––––––––––––––––––––––––For a round-up of the most important stories from around the world - and a concise, refreshing and balanced take on the week’s news agenda - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

However, the BoE expert “emphasised that the economy was still facing an unprecedented collapse and that a steep rise in unemployment posed a threat to a swift rebound”, says the newspaper.

Either consumer spending would ease unemployment or unemployment would cut household spending, Haldane added.

As the BBC notes, both scenarios  “create virtuous or vicious cycles”, but Haldane “said that he could not tell which one would prevail” as yet.

The economy is currently “benefiting from robust strength in consumer spending”, boosted by workers working from home or receiving the government’s furlough payments, the broadcaster adds.

But Haldane said that “as the furlough scheme tapers from August”, there would be “a risk this greater number of furloughed workers are not hired back by employers, adding to the unemployment pool”.

Recommended

Covid-19: everything you need to know about coronavirus
coronavirus.jpg
Coronavirus

Covid-19: everything you need to know about coronavirus

Indian Wells tennis cancelled - is Wimbledon in danger?
Novak Djokovic kisses the winner’s trophy after beating Roger Federer in the Wimbledon final
In Brief

Indian Wells tennis cancelled - is Wimbledon in danger?

Coronavirus impact on sport: ‘serious concerns’ for Olympics
Officials at the Japan Coast Guard base in Yokohama where a cruise ship is in quarantine following an outbreak of coronavirus
In Brief

Coronavirus impact on sport: ‘serious concerns’ for Olympics

‘Vaccine success is on the brink of transforming the lockdown debate’
Boris Johnson watching an NHS first responder getting her vaccination
Instant Opinion

‘Vaccine success is on the brink of transforming the lockdown debate’

Popular articles

How scientists developed a Covid-19 vaccine in record time
A nurse prepares a dose of the Oxford/AstraZeneca Covid-19 vaccine
In Focus

How scientists developed a Covid-19 vaccine in record time

Stalin-themed kebab shop closes after one day
Tall Tales

Stalin-themed kebab shop closes after one day

Why Italy’s government is on the verge of collapse
Matteo Renzi holds a press conference
Getting to grips with . . .

Why Italy’s government is on the verge of collapse

Free 6 issue trial then continue to