Bank of England governor Andrew Bailey ready to act as UK Economy shrink to 20% in April

Bank of England governor Andrew Bailey ready to act as UK Economy shrink to 20% in April

Bank of England governor Andrew Bailey ready to act as UK Economy shrink to 20% in April
Bank of England governor Andrew Bailey is  ready to act as UK Economy shrank to 20% in April due to coronavirus (Covid-19) crisis. He was speaking after figures showed that the country's economy shrank by 20.4% in April - the largest monthly contraction on record - as the country spent its first full month in lockdown. "We are still very much in the midst of this," Mr Bailey said. But he said the figure was "pretty much in line" with what the bank expected.

"Obviously it's a dramatic and big number, but actually it's not a surprising number," he said. The Office for National Statistics (ONS) said April's "historic" fall affected virtually all areas of activity, as large parts of the economy remained shut to battle the pandemic.

The contraction is three times greater than the decline seen during the whole of the 2008 to 2009 economic downturn.

But analysts said April was likely to be the worst month, as the government began easing the lockdown in May.
What else did the governor say?
Mr Bailey said there were "signs of the economy now beginning to come back into life", but the big question was how much long-term damage the pandemic would cause.
"That's the thing we've got to be very focused on, because that's where jobs get lost," he said. "Now we hope that will be as small as possible, but we have to be ready and ready to take action, not just the Bank of England, but more broadly on what we can do to offset those longer-term and damaging effects."
  • What A Shrinking Economy Means In One Town
The ONS also published figures for the three months from February to April, which showed a decline of 10.4% compared with the previous three-month period.

News of the slump comes as almost nine million UK workers are having their wages paid by the government, while the number of people claiming unemployment benefit rocketed by 856,500 to 2.1 million in April.
  • What Was The Political Reaction?

Prime Minister Boris Johnson warned of a "tough" few months ahead, but added: "We will get through it."
"We've always been in no doubt this was going to be a very serious public health crisis but also have big, big economic knock-on effects.
"The UK is heavily dependent on services, we're a dynamic creative economy, we depend so much on human contact. We have been very badly hit by this."

Chancellor Rishi Sunak said life would get "a little bit more back to normal" once High Street shops could reopen. That is set to happen on Monday in England, while shops in Northern Ireland have already been allowed to resume trading. Scotland and Wales have their own timetables for easing restrictions.
In response, shadow chancellor Anneliese Dodds warned that the UK's economy was shrinking faster than those of other countries. She said the UK would need "strong action to help us climb out of this as quickly as possible".
  • What Has Happened To The Economy?
In normal times, a country's Gross Domestic Product (GDP) - the value of the goods and services it produces - increases, making its citizens on average slightly richer. However, the ONS said April's fall in GDP was the biggest the UK had ever seen. "[The fall was] more than three times larger than last month and almost 10 times larger than the steepest pre-Covid-19 fall," said Jonathan Athow, the agency's deputy national statistician for economic statistics. "In April, the economy was around 25% smaller than in February."

He said virtually all areas of the economy had been hit, with pubs, education, health and car sales all seeing marked falls in activity.

Carmakers and housebuilders were also badly affected, although Mr Athow said: "It's highly likely April will be the low point. "Our own surveys and wider indicators have suggested a pick-up in economy activity, but I think it's really too early to know how quickly economic activity will recover in the coming months."

How does the UK economy compare with other countries?
We don't really know yet. The UK is one of the few countries to publish monthly economic data - most others just produce quarterly and annual figures. We do know, however, that coronavirus has already pushed several major economies into recession:
Japan saw a 3.4% fall in GDP for the first three months of 2020. Germany's economy shrank by 2.2% in the first three months of this year .

France saw a 5.8% contraction in the first quarter of 2020.

On Wednesday, the Organisation for Economic Co-operation and Development warned that the UK could be the hardest hit by Covid-19 among major economies.
The British economy is likely to shrink by 11.5% in 2020, slightly outstripping falls in countries such as Germany, France, Spain and Italy, it said.