Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at the Central Bank in London, Britain March 16, 2020. Tolga Akmen/Pool via REUTERS
LONDON (Reuters) – Bank of England Governor Andrew Bailey said on Friday that Britain’s economy was starting to recover from its coronavirus lockdown but some job-intense sectors remained weak and the longer-term outlook was unclear.
“We are seeing activity return. We are beginning to see this recovery,” Bailey said during a webinar organised by the central bank.
There were signs of activity returning “quite strongly” in the housing market and in new car sales, but not in hospitality and entertainment, which employ large numbers of people, many of them on low pay, he said.
There was a “very big question” about how cautious people would be about returning to life as before the crisis and there were also risks of a second wave of COVID-19, or localised outbreaks, Bailey said.
Furthermore, the BoE did not know how much long-term damage the economy would suffer as a result of companies failing.
“We don’t yet know the full story of this,” he said, in response to a question about whether he shared the view of BoE Chief Economist Andy Haldane that the economy looked like it would have a swift V-shaped recovery.
Earlier this week, Britain’s budget forecasters said the economy could shrink by more than 14% this year if there is lasting damage from the coronavirus.
Writing by William Schomberg; Editing by Edmund Blair and Catherine Evans