Bank of England interest rate-setter Jonathan Haskel said that indicators of rising unemployment in the UK caused by the coronavirus crisis “are already revealing themselves.”
In a speech given today, Haskel said there was a risk that Britain’s economy would be harder hit by the pandemic than the central bank has predicted.
“I believe the current stance of monetary policy is appropriate but, on balance, risks are to the downside,” Haskel told the Brighton Chamber of Commerce.
Haskel was among the eight members of the nine-strong Monetary Policy Committee (MPC) who voted last month to expand the BoE’s bond-buying programme to help the economy cope with the economic shock triggered by coronavirus.
Andy Haldane — the sole MPC member to vote against expanding the Bank’s quantitative easing measures — said yesterday that the UK’s economic outlook had improved slightly, bur warned that the risk of high and persistent unemployment remained.
“Worryingly the indicators of rising unemployment are already revealing themselves, with unemployment claims recorded to date enough to put us back to levels of unemployment not seen since the financial crisis,” Haskel said today.
The economist added that there was “a great deal of uncertainty” as to how many of the 9.3m workers currently furloughed under the government’s jobs retention scheme will be able to return to their jobs.
Haskel said the amount of furloughed staff able to return to work will be dependent on “our success as a nation managing and suppressing the virus, and the state of household finances and consumers’ appetite for resumption of discretionary economic activity”.
The jobs retention scheme, under which the government pays 80 per cent of furloughed workers’ wages up to £2,500 per month, will begin tapering off from August before coming to an end in October.
Haskel said that some economic activity, including retail sales and spending, appeared to be recovering from the shock of the coronavirus lockdown faster than the BoE anticipated.
He added that the central bank now expects that the second quarter of 2020 “not be quite as negative as expected”.