LONDON, 22 August. - (ANA) - Britain’s economy will not fully recover from its current historic downturn for at least two years, a Reuters poll of economists found, but there is only a slim chance the Bank of England will use negative interest rates to boost the upswing.

 

Britain has suffered the highest death toll from the novel coronavirus in Europe, leading to criticism of the government’s response to the pandemic.

 

Last quarter, when a lockdown to quell the spread of the virus was at its tightest, the economy shrank a record 20.4 per cent. But as many restrictions have been lifted, it was expected to expand 15.1 per cent this quarter, the Aug. 14-19 poll showed.

 

“The severity of the slump was chiefly a by-product of the very long lockdown in the UK, necessitated by the government’s laissez-faire attitude in the early days of the pandemic, which meant the virus spread more widely than in other countries,” said Samuel Tombs at Pantheon Macroeconomics.

 

Earlier this month the BoE said the economy would not recover to its pre-pandemic size until the end of 2021, but 20 of 23 economists who responded to an extra question said it would be at least two years before that happened. Only three said within two years.

 

After contracting 9.7 per cent this year – more than most of its peers and more than the 9.1 per cent forecast last month – the economy will expand 6.2 per cent in 2021, the poll of nearly 70 economists predicted. In a worst case scenario, it will contract 14.2 per cent this year.

 

Yesterday HSBC predicted the economy will shrink 10.3 per cent in 2020.

 

The economic slump has pushed firms to slash thousands of jobs. While the unemployment rate unexpectedly held at 3.9 per cent in June it was seen peaking at 8.0 per cent in the fourth quarter, the poll found.  - (ANA) -

 

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