Britain's economy will not fully recover from its current historic downturn for at least two years, a Reuters poll of economists found, but there is only a slim chance the Bank of England will use negative interest rates to boost the upswing.
LONDON - Britain’s economy will not fully recover from its current historic downturn for at least two years, a Reuters poll of economists found, but there is only a slim chance the Bank of England will use negative interest rates to boost the upswing.
Last quarter, when a lockdown to quell the spread of the virus was at its tightest, the economy shrank a record 20.4%. But as many restrictions have been lifted, it was expected to expand 15.1% this quarter, the Aug. 14-19 poll showed. After contracting 9.7% this year - more than most of its peers and more than the 9.1% forecast last month - the economy will expand 6.2% in 2021, the poll of nearly 70 economists predicted. In a worst case scenario, it will contract 14.2% this year.
But that scheme is due to finish at the end of October, and all respondents to an extra question said the risk that the job market will worsen significantly before this year draws to a close was high or very high. BoE Governor Andrew Bailey has said that negative interest rates, used by the European Central Bank and the Bank of Japan, were part of the Bank’s toolbox but that it did not have any plans to use them for now.
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