The UK economy is heading back into recession
The Bank of England is pumping another £150 billion ($195 billion) into the UK economy after warning of a double-dip recession because of the coronavirus pandemic and an uncertain outlook because of Brexit.
The UK central bank said on Thursday that it would keep interest rates unchanged at a record low of 0.1% but would increase its purchases of UK government bonds to £875 billion ($1.1 trillion).
Restrictions introduced to tackle a rapid rise in Covid-19 cases would weigh on consumer spending to a greater extent than the bank projected in August, "leading to a decline in GDP" in the fourth quarter of this year, it added.
England re-entered a national lockdown on Thursday, with restaurants, bars and non-essential businesses closed until December 2. The United Kingdom reported its second-largest daily increase in Covid-19 cases on Wednesday with 25,177 new infections recorded in 24 hours.
In a bid to soften the blow to households and businesses, UK finance minister Rishi Sunak on Thursday announced that the British government would extend its furlough program through March 2021. The government will pay 80% of the wages of employees of businesses forced to close, capped at £2,500 ($3,270) per month.
The lockdown and unresolved talks on a post-Brexit trade deal with the European Union left the outlook for the UK economy looking "unusually uncertain," the Bank of England said. Without an EU deal, UK-based companies face hefty tariffs, quotas and other barriers to doing business with the country's biggest export market from January 1.
"It depends on the evolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, the new trading arrangements between the European Union and the United Kingdom. It also depends on the responses of households, businesses and financial markets to these developments."
The central bank expects the economy to shrink by 2% in the fourth quarter, and by 11% in 2020.
Over the longer run, scarring caused by the pandemic will reduce the country's economic output by roughly 1.75%. GDP is not expected to exceed the level it reached at the end of 2019 until the first quarter of 2022.
A survey of business activity published Wednesday showed the increase in private sector activity last month was the weakest since June, with new orders declining and employment dropping.
"November's lockdown in England and a worsening Covid-19 situation across the rest of Europe means that the UK economy seems on course for a double-dip recession this winter and a far more challenging path to recovery in 2021," said Tim Moore, economics director at IHS Markit, which compiled the survey.
The UK economy is expected to have rebounded strongly in the third quarter after suffering the biggest GDP fall of any major economy in the second. It also shrank by 2.5% in the first three months of 2020.
China’s military is rapidly expanding the ability to project power globally and in the coming decade will be capable of waging...
Global banks in Hong Kong, from Goldman Sachs Group Inc. to Standard Chartered Plc, are urging more staff to work from home again...
Forty newsroom staff at i-Cable Communications made redundant with immediate effect, according to source, prompting mass resignations.
Lai stresses the need for 'rule of law' not 'rule of men' in China to ensure financial success
US sanctions have cut off Hong Kong Chief Executive Carrie Lam from the global banking system, the controversial political leader says, forcing her to stockpile cash.
Leaving all your online wealth to the family is your present for their future.
Unfortunately, digital assets don’t really “fit” into a conventional physical will.
Both sides said they will review the arrangement again in late December to decide on a start date.
Hong Kong experts argued that conducting nucleic acid tests on the city's entire population may not be the best choice for...
Hong Kong has seen the introduction of a protection policy that is said to be the first of this kind in the local insurance market.
Pang Lok-sze’s counsel Kim McCoy says Department of Justice’s decision not to prosecute the two suspects in the case was unlawful and tainted by procedural impropriety.
Lau Tsz-kit, 24, locked up for 16 months after saying he would drown or chop up the poodle if payment failed to materialise quickly.
Some 25kg of the dried seafood was airmailed into Hong Kong from Indonesia via Shenzhen, while another 50kg was seized from a flat in Tuen Mun.
If Dominic Raab is genuinely concerned about the national security law for Hong Kong, he should be encouraging British judges to...
Nine months ago, Douglas Woo sparked a $3.2 billion overnight surge in his family’s wealth by unveiling plans to take the centerpiece...
Managers at Hong Kong's i-Cable TV network announced they would be firing at least 40 journalists, editors, and production...
New curbs come after Hong Kong records biggest jump in daily cases since August, most linked to ballroom-dancing venues.
A boy who was thrown from a viewing platform at London's Tate Modern gallery last year has started to walk with a cane, his family has announced.
Shops in England will be allowed to stay open for 24 hours a day in the run-up to Christmas and in January, the housing secretary has said.
Council plans to underwrite a £100,000 unveiling ceremony for a statue of Margaret Thatcher in her home town of Grantham have been approved.
The Queen and the Duke of Edinburgh will spend Christmas at Windsor Castle and not Sandringham as is their usual tradition, Buckingham Palace has said.
The boss of Wales' biggest brewery has called new alcohol rules "closure by stealth" and announced more than 100 managed pubs will be closed from Friday.
A 23-year-old man feared he was going to be beaten up after he and a friend were allegedly hounded by customers and staff for kissing in a pub.
People living in care homes will finally be able to have visitors indoors again with a new system of coronavirus testing.
Despite there being news to celebrate recently, including the roll-out of coronavirus vaccines, Christmas will still be a bit different this year.