BoE's Haldane sees UK economy recovering 'at a rate of knots'

LONDON (Reuters) - Bank of England chief economist Andy Haldane said on Tuesday that he expected Britain’s economy to begin to recover “at a rate of knots” from the second quarter of this year, as vaccines against COVID-19 are rolled out.

FILE PHOTO: The Chief Economist of the Bank of England, Andy Haldane, listens from the audience at an event at the Bank of England in the City of London, London, Britain April 27, 2018. REUTERS/Toby Melville

Haldane said the huge economic shock delivered by the initial lockdown in March and April last year, when output fell 25%, was likely to prove more transient than the 2008-09 global financial crisis that generated a large overhang of bad debts.

Last year Haldane also talked up the prospects of a rapid economic rebound from the first wave of COVID-19, criticising commentators who he viewed as too pessimistic, only for a second wave of coronavirus to send the economy back into reverse.

Britain is now rolling out vaccines faster than almost anywhere else in the world and the government hopes to be able to ease restrictions significantly by Easter and rein in costly economic support measures.

“If we get that recovery that I expect to start coming on stream, probably at a rate of knots from the second quarter, that will hopefully...improve the prospects of re-employment,” Haldane told an online event for students and alumni of Lady Margaret Hall, a University of Oxford college.

Many economists think Britain’s economy is on course to shrink during the current quarter, as the government battles a new wave of COVID-19 with tougher lockdown measures.

Britain recorded its highest daily death toll from the pandemic on Tuesday, taking recorded deaths above 91,000, the most anywhere in Europe.

Haldane played down the risk of a jump in unemployment after government furlough payments to companies are due to end at the end of April.

If the economy was within 5-10% of its pre-pandemic size, there should be no further job losses beyond the roughly one million people who had already lost work, he said.

The last official data, for November, showed output was 8.5% below its pre-pandemic level.

The BoE has doubled its bond purchase target to 895 billion pounds ($1.22 trillion) since the start of the pandemic, and Haldane said he was concerned many investors thought the BoE had done this primarily to finance government borrowing.

Haldane said the scale of bond purchases reflected the economic hit from the coronavirus outbreak, and that he was personally committed to tightening monetary policy as needed to meet the BoE’s 2% inflation target.

($1 = 0.7341 pounds)

Reporting by David Milliken; editing by Michael Holden and Mark Heinrich