Video report by ITV News Economics Editor Joel Hills
The Bank of England has unleashed another £150 billion of action to bolster the battered economy and warned that output will fall in the final three months of 2020 as a result of the second Covid-19 lockdown.
Members of the Bank’s Monetary Policy Committee (MPC) voted unanimously to expand its quantitative easing (QE) programme to a mammoth £895 billion, but held rates at the historic low of 0.1%.
ITV News Political Editor Robert Peston has more:
It said gross domestic product (GDP (the value of a country's products and services)) will pick up in the first quarter of 2021, but warned that activity will still remain “materially lower” than before the coronavirus crisis.
Speaking at a press conference after announcing the increase in QE, Bank of England Governor Andrew Bailey said: “We believe there is value in acting quickly and strongly to support the economy and avoid the risks of any short-term disruption.”
He said the Bank’s work into negative interest rates is continuing, but stressed it stands ready to take more action when needed.
Mr Bailey added: “We are here to do everything we can to support the people of this country – and we’ll do it and will do it quickly.”
Joel Hills with analysis on the latest movements:
The decision came as England began a second national lockdown on Thursday.
Experts fear it could plunge the UK into a double-dip recession, but the Bank’s latest forecasts suggests the economy will narrowly avoid this as activity recovers at the start of next year.
Chancellor Rishi Sunak is also expected to outline further government support for the economy to see it through the latest restrictions when he makes a statement later on Thursday.