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Gloucestershire Business News

Bank of England injects £150billion amid stark forecasts

The Bank of England has warned of a rise in unemployment and a slow recovery after putting an additional £150billion into the economy.

The Bank's Monetary Policy Committee also kept interest rates at a record low of 0.1 per cent.

Its latest predictions suggest the company will continue to shrink by two per cent in the final three months of the year before starting to recover in the neat year.

But it forecasted it would not return to its pre-pandemic level until 2022.

A statement said: "The outlook for the economy remains unusually uncertain.

"It depends on the evolution of the pandemic and measures taken to protect public health, as well as the nature of and transition to the new trading arrangements between the European Union and the United Kingdom."

In total, the Bank believes the economy will shrink by 11 per cent in 2020.

And it expects unemployment to rise from its current level of 4.5 per cent to 7.75 per cent by the middle of next year - the highest rate since 2013.

CBI lead economist Alpesh Paleja, CBI Lead Economist, said: "Further asset purchases once again illustrate the Bank's willingness to go above and beyond to support activity.

With an increasingly murky economic outlook ahead, a further loosening of monetary policy will give reassurance to the business community.

"But monetary policy can only do so much, and as restrictions on activity tighten amid rising infection rates, sectors that remain under pressure may very well need further support."

He continued: "In the meantime, there are five clear steps that are needed to help the economy weather the winter storm.

"We need to keep Covid-secure firms as open as possible, provide assurances that the government's financial and employment support will last the course, put in place a transparent exit plan for lifting lockdown, roll out mass testing without delay, and involve business in decision-making."

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