The Bank of England expects the UK economy to take longer to recover from the corona crisis than previously thought.
As a result, the key interest rate with the UK central bank may still have to be brought below zero later. However, such an intervention is not yet necessary. In some respects, economic forecasts look even slightly more favourable than in a previous forecast in May.
In Thursday’s interest rate decision, policymakers at the central bank in London decided to leave their interest rates unchanged at 0.1 percent for the time being.
The massive bond-buying program was also unchanged. With this program, the Bank of England tries to support the British economy.
As things stand now, the UK economy may not be able to return to December 2019 levels until the end of next year at the earliest, the central bank predicts. In May, the Bank of England had said that the economy could return to pre-crisis levels in the course of the second half of 2021.
However, the recession will probably turn out less sharply. The UK economy now appears to be on track for an overall contraction of 9.5 percent in 2020, the worst performance in 99 years or since World War I.
But in May, the Bank of England still anticipated a 14 percent economic boom. That had meant the worst financial blow in over three centuries. The forecast for unemployment is now also less severe than previously forecast.