LONDON (Reuters) – Bank of England Chief Economist Andy Haldane said there was a risk that the coronavirus pandemic would cause a long-term hit to spending by companies saddled with higher debts and by households worried about their job prospects.
“All crises leave scars and this crisis assuredly will be no exception,” Haldane said on a Royal Economic Society webcast on Monday.
The BoE said last week Britain’s economy could shrink by 14% this year – the most since the early 1700s – due to the government’s coronavirus shutdown, before growing by 15% in 2021. But the central bank warned there were risks of an even worse performance.
Haldane said in the longer term, Britain needed to put its net-zero carbon target and boosting growth in underperforming regions – as pledged by Prime Minister Boris Johnson before the coronavirus crisis – into its growth strategies.
He also said there had been signs of stabilisation in some spending measures recently, although they remained at very low levels and there was no similar sign of a bottoming out in the labour market.
However, Haldane said he took heart from one set of data.
“Apparently Spotify downloads of the REM song ‘It’s The End Of The World As We know It’ peaked two weeks after lockdown began and have been declining since,” he said. “So perhaps, perhaps, we are seeing some stabilisation.”