BoE MPC member Jonathan Haskel said in the Treasury Committee hearing that downside risks to February central economic projections are “much more prevalent”.
- First, “recovery of business investment could be slower than projected, if firms that have borrowed substantially over the past year delayed capital outlays to enable them to repay outstanding loans.”
- Second, there could be “dampening effects of high uncertainty regarding the UK’s future trade relations with the EU, including for trade in services”.
- Third, there are “substantial downside risks to consumer spending… if people remain cautious in their social interactions until vaccinations are more widespread and Covid-19 cases markedly lower, even as restrictions are gradually lifted.”
- Fourth, “emergence of highly transmissible variants of the virus” could “necessitated a reimposition of lockdowns”.
- Fifth, while vaccine efficacy is very high, “less is known about vaccine effectiveness, that is, how well the vaccine works in the field, which depends also on production, logistics and public health policies”.
“With downside risks to the outlook and taking risk management into consideration, as I have done previously, I remain open to the possibility that the economy might need further support to return inflation to target sustainably.” he added.
