London Daily

Focus on the big picture.
Saturday, Oct 04, 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
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×