Bank of England: UK economy to shrink by most since 1706

The Bank of England warned Thursday that the British economy could suffer its deepest annual contraction in more than three centuries as a result of the coronavirus pandemic, before bouncing back next year.

In what it describes as a plausible scenario, the bank said the British economy will be 30 per cent smaller at the end of the first half of the year than it was at the start of it, with the second quarter seeing a 25 per cent slump alone following a 3 per cent decline in the first.

Unemployment is projected to more than double to around 9 per cent, but that figure does not include the 6 million workers who have been retained by firms as part of a scheme that sees the government pay up to 80 per cent of salaries.

The central bank said the economy should start to recover during the second half of the year as the lockdown restrictions start to be lifted and materially so in the latter part of the period.

It noted that the timeliest indicators of UK demand have stabilised in recent ...