The scale of the decline came as the bank’s Monetary Policy Committee announced Thursday it had decided to keep its main interest rate unchanged at the record low of 0.1% and opted against a further expansion of its bond-buying program.
In a statement accompanying its policy decisions, the bank said U.K. GDP is set for a “very sharp fall“ in the first half of the year and a there will be a “substantial increase” in unemployment beyond those workers who have been retained by their companies as part of the government’s Job Retention Scheme.
Overall, it said that the British economy could shrink by 14% this year, but that depends on how long the current lockdown restrictions remain in place. Two of the nine policymakers wanted to increase the bank’s stimulus program by another 100 billion pounds ($124 billion).
The bank said that the timeliest indicators of U.K. demand have generally stabilised at very low levels in recent weeks, after unprecedented falls during late March and early April. And payments data point to a reduction in the level of household consumption of around 30%.
It also said that consumer confidence has declined markedly and housing market activity has practically ceased. Companies’ sales are expected to be around 45% lower than normal in the second quarter of the year, with business investment 50% lower.
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