UK central bank warns of biggest slump in 300 years

The UK’s central bank said on Thursday the UK could suffer its biggest economic slump for more than 300 years due to the coronavirus lockdown.

The Bank of England also kept open the option of announcing more stimulus next month.

In what the central bank called an “illustrative scenario” it said the UK economy could shrink by 25% in the three months to June 2020 — and that UK unemployment could reach 9%.

It said for 2020 as a whole, output could shrink by 14%.

That would be the largest drop in output since the “Great Frost” in 1709.

The central bank’s views were published in its latest monetary policy report.

UK central bank governor Andrew Bailey told reporters: “There is clearly a commitment and a determination to take action should we need to do so …

“I would really leave that strong message with you.”

Bailey said nonetheless that the BoE expected a recovery of the UK economy “to happen over time, though much more rapidly than the pull-back from the global financial crisis.”