BoE’s Haldane: V-shaped recovery ‘a description of the past’
The Bank of England’s chief economist Andy Haldane has said discussion by experts of a so-called V-shaped recovery for the UK economy were not meant to be “a prediction of the future”.
Haldane told the Treasury Select Committee that the use of phrase V-shaped recovery was “so far, a description of what has happened”.
“The V is a description of the past, not a prediction of the future,” he said. “[But] there plainly has been a recovery, and a pretty sharp one.”
“So far it has been a V, [but] that of course doesn’t tell us about where we might go next, and we have still seen a daily diet of news about redundancies across industries.”
Haldane said he believed the UK economy hit its floor around the middle of April, and has recovered almost half of its losses since then.
He said economic activity had grown on average around one per cent per week in the last 10 weeks. If confirmed by official data this month, this would mean roughly half of the 25 per cent fall in activity during March and April has been “clawed back”.
Projections from the Bank’s monetary policy committee suggested that activity had fallen about 20 per cent in the second quarter, compared to earlier forecasts of a 28 per cent drop.
Haldane also cast doubt on the UK’s unemployment situation, saying recent data has misrepresented the situation.
“The latest numbers about unemployment are questionable and are certainly understating [the situation],” he said.
Unemployment had been forecast to rise up to nine per cent, but the Office for National Statistics currently puts it below four per cent.
“By no means, [is the UK] out of the woods on activity or jobs, but materially better than we would have expected two or three months ago.”
The committee is now reviewing the possibility of doing more quantitative easing measures, Haldane said, as well as negative interest rates.
“If there was a further negative shock to the economy we would need to think about further lowering of the cost of borrowing,” he said.