Economy will be scarred for years by virus,.....>

BOE: Economy will be scarred for years by virus, says Bank official Andy Haldane

- The pandemic will leave permanent scars on Britain's economy as households and

businesses cut back spending, the Bank of England's chief economist has warned.

Andy Haldane said that the coronavirus outbreak could cause long-term damage as

companies saddled with higher debts and households worried about their job

prospects cut back spending even after the virus is under control. "All crises

leave scars and this crisis will be no exception," he said on a Royal Economic

Society webcast. His comments suggest that the Bank may have been too bold last

week when it warned of a 14 per cent fall in GDP this year, the deepest decline

since 1706. It expects a 15 per cent rebound in 2021 in a V-shaped recovery that

assumes almost no permanent scarring. Some economists described the outlook as

overly optimistic because it took no account of a lasting hit to jobs or

productivity. The scenario included a small permanent drop in output due to the

pause in investment, but no structural damage was anticipated.

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