— Growth Returned During the ‘Second Week of April’
By Laurie Laird
LONDON (MaceNews) — The UK has enjoyed a robust economic rebound over the past several months, exceeding even the most optimistic forecasts, the Bank of England’s chief economist said Tuesday.
Economic activity has recovered “sooner and faster” than the Bank of England expected, Andy Haldane said during a webcast hosted by the University of Buckingham, with the second week of April marking the “turning point” for the economy. The bank reached that conclusion by monitoring traffic flows, Google searches and bespoke consumer surveys, he said, adding that forecasters are increasingly likely to turn to an “eclectic” range of real-time indicators on assessing output.
Haldane’s assertion that both the UK and other developed economies have “been recovering for two or three months” came just hours after the European Commission downgraded its forecast of 2020 EU gross domestic product by almost a full percentage point to -8.3%.
The bank’s chief economist has been notably more optimistic than other central bankers, not least his colleagues on the BoE’s Monetary Policy Committee. Haldane was the only member to dissent from the decision to expand the bank’s quantitative easing program at a rate-setting meeting last month. GDP shrank by 2.2% in the first quarter, before contracting by almost 25% in the months of April and May.
However, Haldane said there is nothing “preordained” about the shape of the recovery — which he described as a V last week. The path of the UK economy will be determined by public policy decisions, not least schemes to maximise employment. “The jobs risk is very real,” he said, noting that “as much as half of the work force is either unemployed or underemployed.”
The UK Treasury has implemented a furlough scheme providing 80% of idled workers’ pay packet, up to a maximum of £25,000 a month. However, the program will end in October, raising fears of mass unemployment in the autumn. UK Chancellor of The Exchequer Rishi Sunak is expected to provide greater clarity on the future of employment support in an economic statement on Wednesday.