Bank of England pumps extra £150,000,000,000 into economy as lockdown begins

The Bank of England has injected another £150 billion into the economy amid fears the second lockdown will send GDP plummeting and wipe out thousands of jobs.

Tighter coronavirus restrictions, including the national shutdown beginning in England today, are expected to push the UK into another downturn.

Experts fear it could plunge the UK into a double-dip recession, but the Bank’s latest forecasts suggests the economy will narrowly avoid this as activity recovers at the start of next year.

It said gross domestic product (GDP) will pick up in the first quarter of 2021, but warned that activity will still remain ‘materially lower’ than before the coronavirus crisis.

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However, this depends on if restrictions loosen. The Bank expects the economy to shrink 2% in the final three months of 2020, before bouncing back at the start of 2021 when it is hoped lockdown measures can be lifted.

The economy is not expected to get back to its pre-virus size until 2022. Policymakers previously predicted that recovery would be completed by next year.

The size of the Bank’s asset purchase programme, which allows it to release cash into the economy to support everyday activities, now stands at £875bn.

Interest rates will be kept on hold at a record low of 0.1% in a move to bolster the economy.

While it is expected to dodge another recession, the Bank believes unemployment will rise as Government support schemes wind down.

Chancellor Rishi Sunak is expected to outline further measures to see the economy through the latest restrictions when he makes a statement later on Thursday.

He is under pressure to extend the furlough scheme until Spring. It was due to be wound down on October 31 before a u-turn from the Government saw it extended to December 2, when the second lockdown is due to end.

Reports suggest  the Chancellor will announce the 80% furlough scheme will continue to be on offer in any area of the UK that faces the highest level of Covid restrictions – including Tier 3 areas of England.

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