The Bank of England expects the UK economy to take more time to recover from the corona crisis than previously thought. As a result, the main interest rate at the UK central bank may have to be later reduced to zero. For the time being, however, such an intervention is not necessary. In some respects, economic forecasts are even slightly more favourable than in a previous forecast in May.
In the interest rate decision of Thursday, the decision-makers at the Central Bank in London agreed to leave the interest rate unchanged at 0.1 percent. The huge buy programme for bonds was not changed either. With this programme, The Bank of England is trying to support the British economy by acquiring the public and corporate debts.
As things stand, it is likely that the British economy will not be able to return to the December 2019 level until the end of next year at the earliest. In May, the Bank of England had said that the economy could return to pre-crisis levels in the second half of 2021.
But the recession is probably a little less acute. The British economy now seems to be on track for an overall decline of 9.5% by 2020, the worst performance in 99 years since the First World War. But in May, the Bank of England took account of an economic knock-on of 14 percent. That had the worst economic blow in over three centuries. The forecast for unemployment is also less bad than anticipated.