Bank of England governor Andrew Bailey has said the UK economy is showing signs of recovery from the coronavirus crash but he remains worried about unemployment.
“We are seeing the economy come back now somewhat, because obviously the restrictions are beginning to be lifted,” he told schoolchildren today at an event organised by Speakers for Schools.
“But there’s a long way to go, we are very worried about jobs, as are a lot of people.”
The Bank of England’s latest estimate of the path of the economy in May said it could contract by an enormous 14 per cent this year.
However, at the end of last month the Bank’s chief economist Andy Haldane said things were looking better than initially expected.
“There is a debate about which letter of the alphabet will best describe the path of the economy,” he said. “It is early days, but my reading of the evidence is so far, so V.”
Bailey’s comment comes just days after chancellor Rishi Sunak unveiled a £30bn to support jobs as the government’s flagship furlough employment scheme is wound down.
Bailey’s statement that “we are very worried about jobs” is a sign that policymakers are bracing themselves for significant levels of unemployment.
In May, the Bank said unemployment could soar to nine per cent in the second quarter of this year, higher than in the wake of the 2008/9 financial crisis. Yet that was before the chancellor announced his latest measures.
Investors will get their first official sign of the strength of the recovery tomorrow when the official GDP reading for May is released.
Economists are predicting growth of five per cent after the historic 20.4 per cent collapse in April.