Andy Haldane says we’ve seen a rebound
The UK economy has “recovered” about half of the drop in output it saw during the peak of the coronavirus blockade in March and April, according to the chief economist at the Bank of England.
Andy Haldane told MPs there had been a “V” bounce.
Last month Haldane said the economy was “on the road to a rapid recovery,” the so-called “V” shape.
However, other economists have expressed doubts about the potential for such a rapid recovery in activity.
“About half of the approximately 25% decline in activity during March and April has recovered during the subsequent period,” Haldane told members of the Treasury Committee. The economy had grown about 1% per week, he said.
“We have seen a rebound. So far, it has been a ‘V’. That, of course, does not tell us where we might go next,” he added.
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The latest economic growth figures for May indicated an increase of 1.8%, but Haldane is known to account for unofficial real-time data such as Google searches and credit card receipts.
Commenting on those figures at the time, Thomas Pugh, a UK economist at Capital Economics, said the data showed that the recovery “may not have been V-shaped after all” and that “hopes for a rapid rebound in the lock are great. ” ”
“In fact, the path to full economic recovery will likely be much longer than most people anticipate,” he added.
Haldane spoke at a hearing to reconfirm him as a member of the Bank’s Monetary Policy Committee (MPC).
He was the only nine-member MPC member to vote last month against an expansion of quantitative easing, expanding the asset purchase program aimed at boosting the economy.
However, he told parliamentarians that unemployment was rising rapidly and was probably around 6% now, compared to 3.9% in the most recent official figures.
He also echoed his fear that unemployment could reach its highest level since the mid-1980s, as the long-term effects of the coronavirus pandemic affected staff demand in retail and hospitality.
Analysis:
Dharshini David, BBC Business Correspondent
What we all hope for is a quick return to business, livelihood and income.
But most economists doubt that going back to business is as simple or straightforward as ever.
So far, official data has not been encouraging. After losing a quarter of its output in the first six weeks of the lockout, output, or GDP, recovered just 1.8% in May.
Haldane is known to appreciate the most up-to-date unofficial data: Google searches, credit card transactions, for example. That is why he hopes that we are halfway to the previous level of activity.
But even if it is so good so far, the real problem is what happens next.
The Bank of England expects unemployment to rise to 9%, but it is unusual to assume that it will decline rapidly, with no long-term consequences, or scarring, in prospects and earnings.
It is that risk that worries most other analysts that will derail confidence and spending, which is the basis of any recovery.
So the expected V could look quite different. And that’s even before a second wave and shutdown is considered.
