Economy on track for rapid V-shaped recovery, says Bank of England chief economist

Linda J. Dodson

The economy is on track for a short V-shaped recession following early signs that spending has jumped by more than expected, the Bank of England’s chief economist has said.

There has already been a “modest recovery” in spending and business confidence according to real-time indicators, Andy Haldane said.

Mr Haldane argued that early signs such as surveys are “coming in a shade better” than the Bank’s scenario, which already predicted a V-shaped recovery in activity where little long-term damage is done to the economy. This view was dismissed as far too optimistic by many economists, who fear severe long-term damage has already been done.

In an online talk organised by the Confederation of British Industry, Mr Haldane said: “The reason it was atypically sharp and severe on the downswing are the same reasons we would expect it to be atypically strong on the upswing, as and when we see the opening of the economy.

“It’s perhaps still a V but it’s a relatively lopsided V, and the risks to that probably lie to the downside.”

Mr Haldane said the Bank is not “remotely” close to a decision on negative interest rates after a week of fierce speculation on financial markets. He confirmed that the Bank’s rate-setters are reviewing the controversial policy – in which banks would be charged for hoarding cash rather than lending it out – amid fears it could prove counterproductive.

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