Bailey says Bank has more ‘tools’ to help recovery
Andrew Bailey: ‘more positive about the economy’
Bank of England governor Andrew Bailey became the latest City figure to forecast a rebound in the economy once the lockdown restrictions are eased.
He played down fears over surging inflation and said he was looking at “new tools” to deal with the UK’s biggest economic shock in 300 years.
These could include negative interest rates, but “that’s not a view on whether we will use them or not”, he said during a radio interview.
“The economy will actually get back at the end of this year to where it was at the end of 2019,” he said.
He expects pandemic ‘habits’ such as working from home to stay, with people having a ‘hybrid’ lifestyle rather than fully returning to offices.
He spoke of the £150 billion Britons “saved” by consumers who had been unable to spend as usual over the past year – saying it could help drive a bounce back. He did not believe this would result in a sharp spike in inflation.
“I’m now more positive but with a large dose of caution,” he said, adding that it was possible the situation will end up being better than some were predicting.
“There has been a very large build-up in saving in the economy,’ he said. ‘The question of course then is: to what use will those savings be put?”
He said most workers will adopt a hybrid approach to their jobs when restrictions ease “because I think some habits and some practices will prove to be sustainable.”
Earlier this month the Bank’s chief economist Andy Haldane urged the country to spend its way to recovery.
“I very much want as much of that as possible to be spent — that’s what creates the demand and the jobs to help those who may have lost their jobs, who may have suffered a cut in income as a result of the crisis,” he said in a newspaper interview on 3 March.
Conflict of interest claim
Mr Bailey came under new criticism at the weekend for not declaring a potential conflict of interest that saw thousands of bank customers mistreated.
It was reported that Mr Bailey did not reveal his role in helping the Treasury design the body that oversaw the troubled division of RBS, despite being asked about it when he was appointed to his previous job as head of the city watchdog.
The Bank of England said there was no interest to declare.