Bank of England warns of 30% drop to GDP due to coronavirus
7 May 2020, 09:53 | Updated: 7 May 2020, 09:56
The Bank of England has predicted the UK's economy could shrink by 14 per cent this year because of the Covid-19 pandemic.
The Bank has warned of the prospect of an economic hit from coronavirus of close to 30 per cent by the summer as it left interest rates at the historic low of 0.1 per cent after recent emergency action.
Projections from the Bank included a 3 per cent hit between January and March before a 25 per cent decline in GDP in the second quarter. although it cautioned over uncertainty over the forecasts.
Officials cautioned over a "very sharp" fall in GDP over the first half and a "substantial" hike in unemployment.
It said the fall should be temporary and that activity should "pick up relatively rapidly" as lockdown is eased, but added that it would "take some time" for the economy to recover.
The Bank's nine-strong Monetary Policy Committee voted unanimously to hold rates at 0.1%.
It also kept its quantitative easing (QE) programme to boost the economy unchanged at £645 billion after unleashing another £200 billion of bond-buying in March.
But two members of the MPC voted to increase QE by another £100 billion in a sign that more may be on the way soon.
Rates have already been slashed twice, from 0.75%, since mid-March as part of the Bank's measures to try and keep the economy afloat during what is expected to be the steepest recession in living memory.