Bank of England hints at less severe downturn but longer recovery
The Bank of England has predicted that the economic slump caused by Covid-19 will be less severe than expected and warned the recovery will also take longer.
The Governor of the Bank of England Andrew Bailey told the BBC that the Bank expects the UK economy to shrink by 9.5% this year. While this would be the biggest annual decline in 100 years, it is not as steep as its initial estimate of a 14% contraction. The Bank expects the UK economy to grow by 9% in 2021, and 3.5% in 2022, with the economy forecast to get back to its pre-Covid size at the end of 2021.
Mr Bailey said:
"We have had a strong recovery in the last few months. The pace puts the economy ahead of where we thought it would be in May."
Mark Harris, Managing Director, The Business Company comments:
"The latest Bank of England statement by Andrew Bailey strikes a more positive note in terms of the anticipated speed of recovery for the UK economy. However, as he accepts himself, current projections are based on the very recent past, which has seen the sharpest recession in living memory and is totally unprecedented. In my view the small business owner/ leader should take heart from this and focus on three key take-aways from the Bank of England statement:
- 2020 will see the UK economy shrink by 9.5%
- 2021 will see the UK economy rebound and grow by 9% (back to pre-COVID size).
- 2022 will see normality return and a healthy growth of 3.5%.
It is therefore imperative that organisations consolidate activity for the next 6-8 months to ensure they are healthily positioned and agile enough to capitalise on the growth projections from Q2 of 2021 into 2022. Meticulous planning to ensure maximum efficiency is the key to this consolidation through an initial review of all aspects of business activity."
Many companies will be engaging experienced objective advisers to support them during this process to ensure a level of objectivity and structure. The Business Company, has over a decade of experience in this field, and we are keen to support our economy across The Marches/ West Midlands. We are offering a free ½ day initial analysis to support businesses from all sectors who would welcome support.