According to the UK Federal Reserve’s new fiscal policy report, UK GDP could grow by 7.25 per cent in 2021 as a whole, instead of the previously expected 5 per cent.
Britain’s gross domestic product fell 9.9 per cent last year at an unmeasured pace in more than 300 years.
The Bank of England’s monetary board did not change the target amount and the benchmark base rate of 0.10 percent, according to information released at Thursday’s rate decision meeting.
The nine-member committee decided unanimously to keep the key rate, but one council member voted to cut the £895 billion share of quantitative easing available to buy UK government securities by £50 billion, from the current £875 billion to £825 billion. .
Thus the budget remained unchanged by a majority of 8-1, but the Bank of England reduced the weekly schedule of the asset purchase program from £4.4 billion to £3.4 billion.
In March last year, at the start of the coronavirus crisis, the Bank of England cut interest rates from 0.75 per cent to the current 0.10 per cent in two extraordinary meetings, and from 445 billion pounds previously pledged in three steps to 895 billion pounds. (£371 trillion). Increase the quantitative easing framework. From this, the central bank can buy UK government securities or investment pound bonds from companies outside the financial sector.
The Bank of England last raised its target for a liquidity renewal program last November, when it added £150 billion to the portion it could spend on purchases of government securities. The budget of £20 billion for corporate bond purchases remains unchanged.
In its new quarterly fiscal policy report on Thursday, the Bank of England confirmed that the number of new coronavirus infections in the UK has fallen sharply since the previous monetary report in February, and that the vaccination program is moving forward.
As a result, the easing of measures to curb economic activity is also faster than what the central bank assumed in its February report.
According to new forecasts from the Bank of England, UK gross domestic product (GDP) is likely to have contracted 1.25 per cent quarter-on-quarter in the first quarter of this year, leaving GDP 8.8 per cent lower than in the fourth quarter of 2019. .
However, the new monetary policy report from the Bank of England’s Monetary Board confirmed that this is also a sharply improved estimate, as the February forecast included an economic slowdown of around 4.25 per cent for the first quarter of this year.
As expected by the Bank of England UK GDP could rise by 4.25 per cent in the second quarter of this yearAlthough the central bank notes that the value of GDP in the current quarter is still about 5 percent lower than it was in the fourth quarter of 2019, the last full quarter before the first shutdown in March of last year.
All in all, the Bank of England It anticipates GDP growth of 7.25 percent for the entire year and expects it to return to its pre-coronavirus peak by 2021 by the end of 2021..
This annual growth rate has not been in the British economy since it began measuring annual growth rates in 1949 using a methodology similar to the present.
The latest activity metrics revealed on Thursday also point to a very strong recovery in the British economy.
According to a joint survey by IHS Markit Group of Financial and Economic Reports and the Chartered Institute of Purchasing and Supply (CIPS), the seasonally adjusted Composite Purchasing Manager’s Index (BMI) for the UK manufacturing and services sectors was 60.7 in April. The peak was not measured seven and a half years earlier, from 56.4 the previous month. BMI indicators above 50 indicate a rebound in activity in the studied sectors.