Saudi Press

Saudi Arabia and the world
Friday, Aug 22, 2025

Bank of England Governor Bailey denies outlook is optimistic, warns that parts of the economy are 'not viable'

Bank of England Governor Bailey denies outlook is optimistic, warns that parts of the economy are 'not viable'

Central bank Governor Andrew Bailey told CNBC that he would “really lean back on people who think the Bank of England is optimistic.”. The Bank revised up its short-term growth projections, but warned that a full recovery will take longer than initially assumed.. It comes after the Bank of England held interest rates steady and maintained its asset purchase program at existing levels.
Bank of England Governor Andrew Bailey has denied suggestions that the central bank’s economic outlook is too optimistic in the wake of its latest monetary policy report.

The Monetary Policy Committee (MPC) on Thursday held interest rates steady and maintained its asset purchase program at existing levels, while noting a sharper-than-expected but uneven economic recovery so far. The Bank revised up its short-term growth projections, but warned that a full recovery will take longer than initially forecast.


Bailey told CNBC’s Geoff Cutmore on Thursday that he would “really lean back on people who think the Bank of England is optimistic,” since although the data so far has shown recovery in certain parts of the economy, the MPC is “not taking any strong message from that going forwards.”

The central bank now expects U.K. GDP (gross domestic product) to shrink by 9.5% in 2020, compared to the 14% contraction it predicted in May. The economy is then seen rebounding by 9% in 2021, compared to the 15% forecast in May, and to grow by a further 3.5% in 2022.

The “X factor,” Bailey said, will be the evolution of the Covid-19 outbreak, with the Bank’s forecasts including the “largest ever degree of uncertainty in any forecast the MPC has done.” His comments come as modest containment measures are being introduced in parts of the U.K. amid fears of a second wave.

“Closely related to that is people’s natural caution in response to their perceptions and understanding of the evolution of Covid, and how people are cautious about re-engaging in economic activity,” Bailey said, adding that the BOE has seen evidence of this so far.

“The third thing … is to what extent there will be structural change in the economy, because there will be parts of the economy which are not viable, if you like, going forward,” Bailey added.

Some City analysts had expected the Bank to scrap its expectations for a “V-shaped” recovery. Although the August minutes from the Monetary Policy Committee state that GDP is not projected to recover to 2019 fourth-quarter levels until the end of 2021, rather than the second half of 2021 as previously forecast, the BOE’s base case for a sharp recovery remains broadly unchanged.

In response to Thursday’s announcement, Berenberg Senior Economist Kallum Pickering said: “The BoE’s overly optimistic updated economic projections leave the door wide open for more monetary stimulus later this year.”

“Relative to the obvious challenges ahead linked to the COVID-19 pandemic, highlighted by the recent re-imposition of modest containment measures in major parts of the UK, the V-shaped recovery that the BoE continues to project seems unlikely, to put it mildly,” Pickering added.

Berenberg economists expect the same 9.5% contraction in 2020 for the U.K. economy, but forecast a smaller 6.5% recovery in 2021 followed by 2.2% in 2022, with real GDP not returning to its 2019 fourth-quarter level until early 2023.

The BOE estimated that real GDP was more than 20% lower in the second quarter of this year than in the fourth quarter of 2019, and Bailey stressed that the recovery seen so far was “very unevenly distributed.” The Office for National Statistics will publish the official second-quarter GDP estimate on August 12.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Cristiano Ronaldo Makes Surprise Stop at New Hong Kong Museum
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
High-Stakes Trump-Putin Summit on Ukraine Underway in Alaska
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Nine people have been hospitalized and dozens of salmonella cases have been reported after an outbreak of infections linked to certain brands of pistachios and pistachio-containing products, according to the Public Health Agency of Canada
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
Tariffs, AI, and the Shifting U.S. Macro Landscape: Navigating a New Economic Regime
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Russia Formally Recognizes Taliban Government in Afghanistan
×