Bank of England (BOE) governor Andrew Bailey said there are signs the UK economy is gradually coming back to life, and that the bank is willing to take action to help the country get through the damage done by the coronavirus pandemic.
In an interview with Sky News, he said: “It’s early days and I don’t want to emphasise too much” but there is “a gradual coming back into life…we do see those signs.”
However, he added the big question isn’t how quickly the economy will recover “but how much long-term damage there is going to be and that’s the thing we have to be very focused on because that’s where jobs get lost and damage is done to peoples livelihoods.”
This comes after the Office for National Statistics (ONS) said the UK’s GDP fell by 20.4% in April, the largest fall since monthly records began in 1997, “reflecting record widespread falls in services, production and construction output”.
The monthly decline is three times greater than the fall experienced during the 2008 to 2009 economic downturn, ONS said, and massively outstripped the then-record 5.8% drop in March of GDP reported last month.
The contraction was more modest in March, since the UK-wide lockdown was not implemented until late in the month.
Bailey said a drop of 20.4% was unsurprising and generally in line with what the bank had expected.
“Well obviously it’s a dramatic and big number, but actually it’s not a surprising number. “The economy clearly closed down substantially in the end of March into April, so it’s not surprising. It’s actually pretty much in line with what we were expecting,” he said.
On Wednesday, the Organisation for Economic Co-operation and Development (OECD) warned that the UK economy could be among the worst affected by the economic impacts of the coronavirus pandemic.
If there is no second wave of the virus, the OECD said that the UK economy will contract by 11.5% in 2020, the sharpest decline due to be experienced by any of the 37 members of the organisation.
But OECD chief economist Laurence Boone noted that it was difficult to accurately predict the precise impact.
Even the BOE has been hesitant to issue clear-cut predictions. Though the bank last month suggested the country was on the precipice of its worst recession in over 300 years, it decided not to issue its traditional forecasts.