In a report, BoE said “increased uncertainty, lower confidence and a tightening in financial and credit conditions can amplify the initial falls in spending and production” due to coronavirus pandemic and the measures taken to contain it.
There could be ” longer-lasting ‘scarring’ effects on the economy” despite the efforts to ease the severity of the economic downturn. Meanwhile, the impact of the pandemic on inflation is “very uncertain”.
Separately, Chief Economist Andrew Haldane said “we’ve seen activity across the economy collapse, and we’ve seen a rapid rise in inactivity among workers – both people being made unemployed, but importantly … 8 million people underemployed due to furlough schemes”
“That’s a level of inactivity in the jobs market we haven’t seen, possibly ever,” he added.
