UK vaccine rollout has no effect on latest BoE economic forecast, says Andrew Bailey
The UK’s vaccine rollout and new roadmap out of lockdown will not affect the Bank of England’s 2021 economic forecast, according to its governor Andrew Bailey.
Bailey said that the latest forecasts, which were done late last year, predicted that economically the UK would be “back to where we were” in early 2022 and that the UK’s fast vaccine rollout has not changed expectations.
Bailey told Westminster’s Treasury Select Committee that first quarter GDP would be below previous expectations, however this was expected as a second national lockdown was not figured into the calculations.
“Broadly what the forecast embodies is that starting from a lower level at the end of this quarter, we assumed the economy would open up during the second and third quarters, and by roughly the early part of next year we would be back to where we were pre-Covid,” he said.
“But because we were starting from a lower level, we have a somewhat higher growth rate during the course of the rest of this year.
“The Prime Minister’s [roadmap] announcement is broadly consistent as we take it with our forecast – what I mean is that we had activity returning over the second and third quarters.
“We think it’s consistent with what we have in the forecast.”
The UK’s GDP contracted by 9.9 per cent in 2020 – the largest fall on record.
GDP growth in the fourth quarter of 2020 was 1 per cent – higher than expected.
“We’ve all become more adept at finding ways to do things during lockdowns – online shopping being hte primary case in point,” Bailey said.
“The fourth quarter was actually stronger than we thought it would be.”