Joseph Pruitt

Economists warn that Britain’s economy is facing a coronavirus-induced recession that could mirror the 2008 financial crisis (FT 1). There is vast uncertainty over the depth and timeline of the forecasted recession, but with unemployment surging most economists agree it is unavoidable (FT 1). Britain faced criticism from Devi Sridhar, chair of global public health at the University of Edinburgh, for its “worrying and possibly reckless” response to COVID-19 (WP). British Prime Minister Boris Johnson, after announcing testing positive for COVID-19 on Friday, promised to “continue…to lead the national fightback against coronavirus” (Reuters).

The Bank of England warned that the U.K. will undergo “a very sharp reduction in [economic] activity” from business closures and reduced consumer spending (FT 2). The Monetary Policy Committee (MPC) pledged taking any steps necessary to prevent anxious financial markets from amplifying the effects of COVID-19 on the economy (FT 2). The MPC began honoring this pledge by reducing interest rates to the minimum .1 per cent and printing 200 billion pounds to buy government bonds (FT 2). The MPC indicated that these actions, which calmed financial markets, will not prevent a deep recession since economic activity continues to decline (FT2).

Posted March 31, 2020