LONDON (Reuters) – Bank of England Chief Economist Andy Haldane said there was a risk that overly pessimistic, “Chicken Licken” views about the coronavirus crisis would hold back Britain’s recovery from its COVID-19 lockdown economic shock.
“Encouraging news about the present needs not to be drowned out by fears for the future. Now is not the time for the economics of Chicken Licken,” Haldane said in a speech, citing a folk tale bird who worried about the sky falling in.
Haldane has been the most optimistic voice among the BoE’s interest rate-setters since the lockdown.
In his speech on Wednesday he said none of the conditions that would justify taking rates negative had been met.
Haldane acknowledged that Britain faced an “unholy trinity of risks from COVID, unemployment and Brexit” but it was important that the economy’s quicker-than-expected recovery, so far, from the lockdown was not overlooked.
“My concern at present is that good news on the economy is being crowded-out by fears about the future,” he said in his speech delivered online to Cheshire and Warrington Local Economic Partnership body.
“This is human nature at times of stress. But it can also make for an overly-pessimistic popular narrative, which fosters fear, fatalism and excess caution. This is unhealthy in itself but, if left unaddressed, also risks becoming self-fulfilling.”
Writing by William Schomberg, editing by David Milliken and Sarah Young