Bank of England policymaker, Michael Saunders, told the Treasury Committee that Britain faces the risk of a significant rise in unemployment, higher corporate debt, and depleted household savings, particularly among poorer families.
Plus, firms will be more cautious after suffering this year’s economic slump, Saunders warned, in a reminder not to get carried away by vaccine optimism.
Obviously it’s better to have a vaccine than not, but those are hangovers from the pandemic even as and when there is an effective vaccine, which I suspect will weigh on the economy for some time.
Bank of England Governor Andrew Bailey said the recent vaccine trial news was “excellent”
Speaking personally, it felt like the first time in eight or nine months that there is some lights coming at the end of the tunnel.
I have to say I think it’s terrific news, and I take my hat off to all the people involved in doing this work on these vaccines.
Bailey told MPs that a no-deal Brexit would have deeper long-term consequences for the economy than Covid-19, adding that a deal was in the UK and the EU’s best interests.
Bailey also said the Bank is investigating how its decision to conduct another £150bn of QE was reported in advance by The Sun.
The BoE also showed it has little time for MMT, with chief economist Andy Haldane dismissing it as “not modern, not monetary and not really theory.”
The latest health check on the UK economy is less terrific, showing that the private sector is shrinking this month amid the lockdown. Services sector firms reported a drop in activity, indicating that the UK economy may be shrinking again this quarter.
But, business confidence has risen following recent vaccine trial results.
Business activity in the eurozone also fell, driven by a sharp fall in France.
But America’s economy seems to be accelerating, despite the surge in Covid-19 cases, with the biggest PMI increase in five years.
The UK stock market has dipped, despite AstraZeneca becoming the third pharmaceuticals firm to report that its Covid-19 vaccine was effective.
Trials shows it was 70% efficacy, up to 90% if a smaller dose is given first.
The oil price rallied by 2%, though, pushing Brent crude to its highest since September.
