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UK economy on course for V-shaped recovery, says Bank of England chief Andy Haldane

Mark Shapland

Bank of England chief economist Andy Haldane has said the UK economy is on course for a V-shaped recovery.

Haldane, who also sits on the Bank’s interest rate-setting committee, believes the recovery in the UK and globally had come “sooner and faster” than expected.

He added that the UK economy was benefiting from a greater than predicted underlying strength in consumer spending across the country.

In a speech at a Webinar Haldane said: "There is a debate about which letter of the alphabet will best describe the path of the economy, with some scepticism about the V-shaped scenario path in the Bank’s May Monetary Policy Report.

"It is early days, but my reading of the evidence is so far, so V.

“The recovery in both the UK and global economies has come somewhat sooner, and has been materially faster, than in the MPC’s May Monetary Policy Report scenario - indeed, sooner and faster than any other mainstream macroeconomic forecaster.”

Haldane said if the economy continues recovering on a similar path as lockdown measures ease further, then the loss in annual GDP could far lower than first feared, at 8% against 17% forecast in May.

But he warned some of this may be down to pent-up demand, as well as the massive Government support for households and businesses through the scheme to furlough workers on 80% pay.

He added that there was a risk of soaring unemployment when the Government support measures end, which could impact the path of recovery.

Haldane was the only one on the nine-strong Monetary Policy Committee to vote against increasing QE in the June meeting.

The Bank recently predicted GDP to tumble by 20% in the first half of the year, which is far less than the 27% it predicted in its May forecast.

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