LONDON (Reuters) – Bank of England Governor Andrew Bailey said on Tuesday that the recent resurgence of the COVID-19 pandemic had left Britain’s economy in a very difficult period that will delay its eventual recovery.
“(We’re) in a very difficult period at the moment and there’s no question that it’s going to delay, probably, the trajectory,” Bailey said in an online speech to the Scottish Chambers of Commerce.
However, he added that the basic shape of the recovery was likely to reflect the trajectory that the BoE outlined in a set of forecasts in November.
Bailey said he no longer thought that Britain’s unemployment rate would peak at around 7-8%, as the BoE forecast two months ago, because the government had extended its job protection scheme.
But the unemployment rate was probably still higher than the latest official estimate of 4.9% he said.
“Our best guess nationwide is probably it’s around 6.5%,” Bailey said.
He added that economic activity during the first quarter would be depressed until COVID-19 vaccines are widespread enough to allow a lifting of some of the lockdown restrictions.
(Reporting by David Milliken; writing by Andy Bruce; editing by William Schomberg)
