CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 87.41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Scan to Download iOS&Android APP

Bank of England makes u-turn on prediction of fast economic recovery for UK

By Ramla Soni

15:31, 6 August 2020

Share this article

Subscribe to Weekly Highlights

The major market events for the week ahead right in your inbox. Subscribe

The Bank of England has changed its prediction that the UK economy would recover quickly from the recession caused by the coronavirus crisis, and said that GDP would not exceed pre-pandemic levels until the end of 2021.  

The Monetary Policy Committee (MPC) left interest rates on hold at 0.1 per cent with its target for the total stock of its asset purchases also unchanged at £745bn (€827bn, $981bn).  

It said the initial hit from lockdown measures had not been quite as severe as it had projected in May, although it expected output to be more than 20 per cent lower in the second quarter of 2020 than it had been in the final quarter of 2019. 

A strong recovery in some areas of consumer spending is expected to drive a rapid rebound over the coming months. The pound rose 0.4 per cent against the US dollar to $1.316 after the decision, its highest level since March.

The MPC was also more optimistic about the outlook for unemployment than it had been in May, predicting the jobless rate would peak at about 7.5 per cent at the end of this year, before declining gradually. 


16,852.30 Price
-1.050% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 60.00


0.38 Price
-1.870% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 0.00327

Natural Gas

5.70 Price
+5.730% 1D Chg, %
Long position overnight fee 0.0464%
Short position overnight fee -0.0723%
Overnight fee time 22:00 (UTC)
Spread 0.006


11,516.10 Price
-0.370% 1D Chg, %
Long position overnight fee -0.0164%
Short position overnight fee 0.0059%
Overnight fee time 22:00 (UTC)
Spread 1.8

The BoE forecast the recovery would slow dramatically after the third quarter of 2020, reflecting consumers’ continued concerns over health risks and fears over job security. By the end of this year, GDP is expected to remain five per cent below its pre-pandemic peak and only to regain its pre-crisis level at the end of 2021. 

Even by the end of 2023, when the forecast period concludes, GDP would remain 1.5 per cent below its pre pandemic trajectory, according to the bank. This long-term damage is because business investment and start-up activity is expected to remain weak, weighing on productivity.   

The bank’s Financial Policy Committee said companies continued to face a severe cash-flow shock, with many likely to need further finance to survive the disruption. It predicted that if the economy followed the path set out in the BoE’s central projections, companies could face a cash-flow deficit of up to £200bn in this financial year. 

Rate this article

Share this article

Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Latest Economics headlines

Still looking for a broker you can trust?

Join the 475.000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading