The UK economy is on track for a “V-shaped” recovery after a faster-than-expected rebound after the foreclosure crisis, according to the Bank of England.
Andy Haldane, the Bank’s chief economist, said early evidence suggested Britain was benefiting from increased consumer spending after restrictions on coronaviruses eased.
He said if the rebound continues on the same path, the annual GDP loss could be much lower than initially feared, at 8% from the 17% forecast last month.
However, he warned that “considerable” risks remain, including mass unemployment once the government’s leave program ends in October.
In a webinar speech on Tuesday, Mr Haldane said: “While these risks are in my view slightly more balanced than in May, they remain on the downside.
“Among these risks, the most important to avoid is a repeat of the high and long-term unemployment rates of the 1980s, especially among young people. “
His comments come after Bank Governor Andrew Bailey warned of getting “carried away” by signs that the recession may not have been as steep as expected.
Mr Haldane said “the recovery in the UK and global economies came a little earlier and was significantly faster” than predicted by the Bank’s Monetary Policy Committee in May.
He added: “This is the start, but my reading of the evidence is so far, so V.”
Official figures released on Tuesday showed the economy contracted more than previously thought between January and March, down 2.2% – the biggest drop since 1979.
But Mr Haldane called the record 20.4% contraction of UK GDP in April “ancient history”, given the recovery in the UK and global economy.
The bank’s chief economist was the only one of nine members of the Monetary Policy Committee to vote against increasing quantitative easing at the June meeting.
Additional reporting by the Press Association