BoE Chief Economist Andy Haldane said two paths are possible for the economy in H2. “One involves a negative feedback loop from higher unemployment to lower spending, the other a positive feedback loop from higher spending to lower unemployment.”

The first poses a downside risk to the outlook, the second an upside risk. “As things stand, it is unclear which of these scenarios, or feedback loops, will prove the more potent,” he added.

Haldane also said risks to the economy remain “considerable and two-sided”. “Of these risks, the most important to avoid is a repeat of the high and long-duration unemployment rates of the 1980s, especially among young people.”

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