Bank of England chief economist Andy Haldane listens from the audience at an event at the Bank of England in London on April 27, 2018.TOBY MELVILLE/Reuters
Recent signs suggest Britain is on course for a V-shaped economic recovery from the coronavirus lockdown but there is still a risk of high and persistent unemployment, the Bank of England’s chief economist Andy Haldane said on Tuesday.
“It is early days, but my reading of the evidence is so far, so V,” Haldane said in a speech delivered online.
He described the risks to the economic outlook at as “considerable and two-sided” before adding: “Although these risks are in my view slightly more evenly balanced than in May, they remain skewed to the downside.”
Haldane cast a lone vote against the BoE’s expansion of its bond-buying program earlier this month.
He said business surveys suggested the recovery in Britain and global economies had come “sooner and faster than any other mainstream macroeconomic forecaster” had predicted.
Other economists have warned that the business surveys are unreliable at times of economic upheaval as they are not designed to capture such large shifts in demand.
The depth of the recession was likely to exacerbate any long-term damage to the labor market which could push up Britain’s natural rate of unemployment (NAIRU), Haldane said.
A higher NAIRU means an economy is more likely to overheat and generate inflation as the labor market strengthens.
“Historically, pandemics have not tended to have a persistent upward impact on prices. But a higher NAIRU would be one reason to be cautious before jumping to that conclusion,” Haldane said.
Answering questions after his speech, Haldane said he was “open-minded” about the possibility of more stimulus from the BoE for Britain’s economy, if necessary.
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