London Daily

Focus on the big picture.
Thursday, Jul 31, 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

0:00
0:00
Close
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×