BOE’s Chief Economist Says ‘Rip Roaring’ Recovery Is Possible

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The U.K. economy could see a “rip roaring” recovery even if consumers spend just a bit of the additional savings they accumulated during the Covid crisis, according to Bank of England Chief Economist Andy Haldane.

Doubling down on his optimistic outlook for an economic resurgence, Haldane told ITV’s Robert Peston show that he expects a sharp bounce back as restrictions on the economy are removed. He said about 150 billion pounds ($205 billion) has been saved over the past year, mostly by higher income households.

“If some of those savings do get spent, even a small amount of them, we’re talking abut a pretty rip roaring recovery,” he said in an interview on Peston’s show broadcast on Twitter. “When it comes, it will come fast, and it will be large.”

BOE’s Chief Economist Says ‘Rip Roaring’ Recovery Is Possible

Haldane’s comments follow data showing U.K. business activity increased at the fastest pace since August this month, bolstered by new orders and a rebound in confidence in anticipation of easing lockdown restrictions. A separate report showed inflation slowed unexpectedly in February.

What Bloomberg Economics Says...

“We expect output to hit its pre-virus level by spring 2022. The economy’s rapid recovery will probably shift the focus of debate at the Bank of England toward how and when to withdraw stimulus.”

-- Dan Hanson, senior economist. Click here for full INSIGHT.

Haldane also said:

  • Approaches made to the BOE by former Prime Minister David Cameron for loans on behalf of the now defunct Greensill Capital were not inappropriate and that the company was never eligible for the funds
  • Working from home more often is likely to continue as a permanent change from the pandemic
  • London and other cities will avoid a “hollowing out” and will retain their “magnetic attraction”

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