Bank of England boss Andrew Bailey and his deputy Ben Broadbent have today both signalled the effects of the UK’s third Covid-19 lockdown.
In separate speeches, Bailey and Broadbent spoke on the impact of the current nationwide lockdown, the furlough extension and consumer behaviour.
The UK economy was facing its “darkest hour”, but Bailey also said a quick rebound could be in sight if a swift Covid-19 vaccine rollout occurs.
“There’s an old saying about the darkest hour is the one before dawn,” Bailey said in a speech to the Scottish Chambers of Commerce.
“(We’re) in a very difficult period at the moment and there’s no question that it’s going to delay, probably, the trajectory.”
Bailey also played down suggestions that cutting interest rates below zero would be a straightforward way to boost growth.
Broadbent, meanwhile, reiterated earlier predictions of a “double-dip recession” since he expected UK GDP to have fallen in the the final quarter of 2020 and the first quarter of 2021.
The deputy governor said he had reassessed an earlier prediction of unemployment hitting eight per cent, after taking into account the extension of the government’s furlough scheme.
Joblessness will still rise when the scheme ends, he said.
However, the wage subsidy scheme extension had shielded consumers “from the huge drop in national income” and smoothed out the impact of Covid-19 on incomes and therefor spending.