The Bank of England has warned that the UK economy is heading towards its sharpest recession on record. The impact of coronavirus meant the economy would shrink 14% this year, based on the lockdown being relaxed in June.
Scenarios drawn up by the Bank to illustrate the economic impact said Covid-19 was “dramatically reducing jobs and incomes in the UK”. Bank governor Andrew Bailey told the BBC there would be no quick return to normality. He described the downturn as “unprecedented”, and said consumers would remain cautious even when lockdown restrictions are lifted.
Mr Bailey said: “Not all of the economic activity comes back. There’s quite a sharp recovery. But we’ve also factored that people will be cautious of their own choice. “They don’t re-engage fully, and so it’s really only until next summer that activity comes fully back.”
