BoE’s Haskel: Concerned About Economic Recovery Getting Stuck

23 July 2020

By David Barwick – FRANKFURT (EconoStream) – Consumers’ uncertainty will restrain the economic recovery from the pandemic, Jonathan Haskel, external member of the Bank of England’s Monetary Policy Committee, said on Thursday.

In a speech for a webinar hosted by Imperial College Business School, Haskel said he was worried that the upturn would be halting, making it hard to restore inflation in line with the BOE’s target.

In terms of the recovery, Haskel said he ‘would put weight on the logic that suggests that as a behavioural response to the supply shock, cautious consumers, worried about unemployment and health risks, will hold back the economy.’

Noting that he had supported greater monetary accommodation in recent months, Haskel said he was ‘concerned about the economy “getting stuck” and recovering only slowly and undershooting the inflation target.’

Job market data and other indicators ‘point to troubling times ahead’, he said. PAYE data and claims for job seekers allowance and universal credit since the pandemic erupted ‘indicate the potential for the unemployment rate to rise above levels seen after the financial crisis’, he said.

UK joblessness in the wake of the global financial crisis peaked at 8.5% in November 2011, he noted.

‘It would also seem likely that as the furlough schemes wind down, workers currently furloughed will further add to the numbers already unemployed’, he said. Haskel said it was noteworthy that almost a third of furloughed workers consider it at least ‘quite likely’ that they will become redundant.