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07 May 2020

Bank of England: Spending-Spree on Hold

Saul Fulda, Investment Analyst

The Bank of England refrained from launching further stimulus measures today, despite forecasting that the UK economy was set to fall by 30% in the first half of the year. Unemployment is also expected to rise from its record lows to around 9%, close to the post-2008 financial crisis peak, thus eradicating a decade of successful job creation.    

Although the Bank of England Governor, Andrew Bailey, hankered to inject some positivity into his statement, establishing a rapid economic bounce back, the bleak figures speak for themselves - the road to recovery will be long and labyrinthine.

Yet, the Bank has made the correct decision in not bolstering its stimulus measures: £200bn has already been pledged to buy government bonds while the base rate was slashed from 0.75% to 0.1% in mid-March. 

We all hope that a second wave of COVID-19 is kept at bay, but should one emerge later this year, Britain would require a fiscal and monetary boost to power the economy forward. Better for the Bank to hold its hand steady for now than prematurely go all in.
Bank of England: Spending-Spree on Hold
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