Bank of England: Britain to Experience Worst Recession in Over 300 Years Because of Coronavirus Pandemic
The Bank of England (BoE), the central bank tasked with overseeing monetary policy in Britain, is predicting the worst economic recession in over 300 years due to the coronavirus pandemic.
The BoE anticipates output to plunge by a massive 30 percent over the first half of year, which would be the biggest loss of productivity in the nation since 1709’s “great frost.” They do not intend at the present time to embark on another round of stimulus spending but reserve the right to do so in the future.
“For all members of this group, the prospective weakness in employment and inflation, and downside risks around aspects of the medium-term outlook, might necessitate further monetary policy action,” members of the BoE’s Monetary Policy Committee wrote.
They are warning banks that stopping loan creation will result in far more bankruptcies and greater losses on existing loans. Restricting lending, they argue, would only lead to negative long-term ramifications for the global economy and put the banks in danger of permanently shuttering as well.
“The better path for banks is to keep lending . . . we keep banging this message home. If the system [ensures a good supply of loans], we’ll get a better outcome,” said BoE governor Andrew Bailey while addressing reporters. Britain’s biggest banks apparently received the message loud and clear, if their rhetoric can be trusted.
Alison Rose, who is a chief executive at the National Westminster Bank (NatWest), maintained that her bank is committed to lending throughout the crisis. She said that NatWest is “committed to providing our customers, communities and colleagues with the support they need.”
Jes Staley, who is chief executive of Barclays, said during his bank’s annual general meeting on Thursday that they will emerge from the economic turmoil with “a reputation as having stood with the citizens of Great Britain in this time of crisis.”
The Lloyd’s Banking Group also maintains that they will help Britons remain afloat during the crisis. Their chief executive António Horta-Osório stated last week that the bank is working hand-in-hand with government regulators “to ensure that we play our part in supporting our customers and the UK economy.”
Although the BoE is predicting short-term doom, they claim that long-term projects remain strong. They estimate that there will only be “limited scarring to the economy” and the rebound will endure and be restored “much more rapidly than the pullback from the [previous] global financial crisis” over a decade ago.
Britain isn’t the only country that is suffering economic disaster due to the coronavirus pandemic. The International Monetary Fund (IMF) has warned that the conditions globally are the worst the world has seen since the Great Depression:
While the so-called experts call for a longer and longer societal lock down, financial analysts are warning that emergency measures to stop the coronavirus pandemic are likely to result in the worst economic damage in nearly a century.
The International Monetary Fund (IMF) predicted on Tuesday that the coronavirus pandemic will result in the worst recession since the Great Depression, even surpassing the economic turmoil of the late 2000s. They expect a contraction of the world economy by 3 percent whereas the economy only contracted 0.7 percent in 2009.
“The Great Lockdown, as one might call it, is projected to shrink global growth dramatically,” said IMF economic counselor Gita Gopinath in the fund’s 2020 World Economic Outlook. “Much worse growth outcomes are possible and maybe even likely.”
If the virus subsides over the second half of the year, the IMF expects economic growth to pick back up. They anticipate 5.8 percent growth in 2021 as a projected recovery takes hold aided by stimulus funds and money printing. This is only speculation, as certain experts predict that the coronavirus shut down could last many months. The IMF notes the “extreme uncertainty” of the situation while making their predictions.
“Many countries face a multi-layered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals, and a collapse in commodity prices,” the fund’s outlook states. “Risks of a worse outcome predominate.”
The cure to the coronavirus pandemic will likely be far worse than the disease, as the world learns the hard way that succumbing to mass hysteria can have terrible consequences.