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Bank of England releases recession warnings

Thursday 7 May 2020 14:17 CET | News

The Bank of England has warned that the UK economy will be hit by recession because of the coronavirus pandemic.

The Bank's scenario showed the UK economy plunging into its first recession in more than a decade, according to BBC. In this scenario, the economy shrinks by 3% in the first quarter of 2020, followed by a 25% decline in the next three months to June. This would push the UK into a technical recession, defined as two consecutive quarters of economic decline.

UK’s central bank declared that the economy was on course to diminish 14% in 2020, based on social distancing measures being gradually phased out between June and September 2020. Policymakers voted unanimously to keep interest rates at 0.1%.

While UK growth is expected to rebound in 2021 to 15%, the size of the economy is not expected to get back to its pre-virus peak until the middle of 2021. However, the Bank expects no lasting damage from the pandemic, with the economy, employment, and earnings gradually returning to pre-virus growth rates.

The Bank warns that this is not a typical forecast and that ‘many other scenarios are plausible’, according to bbc.com.


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Keywords: Bank of England, recession, coronavirus, pandemic, technical recession, economic decline, interest rates, economic challenge
Categories: Banking & Fintech | Payments General
Countries: United Kingdom
This article is part of category

Banking & Fintech