LONDON: British economic output is set to crash 14 percent this year owing to the coronavirus, the Bank of England said Thursday as it left its interest rate at 0.1 percent.
UK gross domestic product would rebound by 15 percent in 2021 however, the BoE said following a meeting that took place Wednesday.
Following the COVID-19 outbreak, the Bank of England slashed its main interest rate to a record-low 0.1 percent and decided to pump $244 billion (£200 billion) into the UK economy to get retail banks lending to businesses at risk of collapse.
Two members of the nine-strong Monetary Policy Committee, but not governor Andrew Bailey, voted at the latest meeting to increase the stimulus by a further $122 billion.
“Without further monetary stimulus, there could be greater scarring effects on the economy via both demand and supply channels,” Jonathan Haskel and Michael Saunders argued, according to minutes of the meeting.
For the entire year, the Bank of England forecast that GDP would plunge 14 percent despite picking up “materially in the latter part of 2020 and into 2021 after social distancing measures are relaxed.”
After a sharp rebound of 15 percent in 2021, output is forecast to grow by 3.0 percent in 2022, the BoE added.
British Prime Minister Boris Johnson was on Sunday set to outline plans on easing Britain’s nationwide lockdown, with initial restrictions expected to be lifted from next week.
The country’s official virus death toll has overtaken Italy’s to become the highest in Europe, with more than 32,000 fatalities related to COVID-19 — behind only the United States in the global tallies.
It comes amid reports that finance minister Rishi Sunak is looking into tapering the government’s furlough scheme that is paying UK workers stuck at home.
Latest government figures showed 6.3 million people were being paid up to 80 percent of their salaries, costing the taxpayer £8 billion.
IAG, the owner of British Airways and Spanish carrier Iberia, meanwhile said Thursday that it had fallen into a net loss of $1.8 billion during the first quarter, as the pandemic grounded planes worldwide.
UK economy to slump 14% this year on virus: Bank of England
https://arab.news/66su4
UK economy to slump 14% this year on virus: Bank of England
- UK gross domestic product would rebound by 15 percent in 2021 however
- ‘Without further monetary stimulus, there could be greater scarring effects on the economy via both demand and supply channels’
Saudi Arabia set to attract $500bn in private investment, Al-Falih tells conference
RIYADH: Sustainability, technology, and financial models were among the core topics discussed by financial leaders during the first day of the Momentum 2025 Development Finance Conference in Riyadh.
The three-day event features more than 100 speakers and over 20 exhibitors, with the central theme revolving around how development financial institutions can propel economic growth.
Speaking during a panel titled “The Sustainable Investment Opportunity,” Saudi Investment Minister Khalid Al-Falih elaborated on the significant investment progress made in the Kingdom.
“We estimate in the midterm of 2030 or maybe a couple of years more or so, about $1 trillion of infrastructure investment,” he said, adding: “We estimate, as a minimum, 40 percent of this infrastructure is going to be financed by the private sector, so we’re talking in the next few years $400 (billion) to $500 billion.”
The minister drew a correlation between the scale of investment needs and rising global energy demand, especially as artificial intelligence continues to evolve within data processing and digital infrastructure in global spheres.
“The world demand of energy is continuing to grow and is going to grow faster with the advent of the AI processing requirements (…) so our target of the electricity sector is 50 percent from renewables, and 50 percent from gas,” he added.
Al-Falih underscored the importance of AI as a key sector within Saudi Arabia’s development and investment strategy. He made note of the scale of capital expected to go into the sector in coming years, saying: “We have set a very aggressive, but we believe an achievable target, for AI, and we estimate in the short term about $30 billion immediately of investments.”
This emphasis on long-term investment and sustainability targets was echoed across panels at Momentum 2025, during which discussions on essential partnerships between public and private sectors were highlighted.
The shared ambition of translating the Kingdom’s goals into tangible outcomes was particularly essential within the banking sector, as it plays a central role in facilitating both projects and partnerships.
During the “Champions of Sectoral Transformation: Development Funds and Their Ecosystems” panel, Saudi National Bank CEO Tareq Al-Sadhan shed light on the importance of partnerships facilitated via financial institutions.
He explained how they help manage risk while supporting the Kingdom’s ambitions.
“We have different models that we are working on with development funds. We co-financed in certain projects where we see the risk is higher in terms of going alone as a bank to support a certain project,” the CEO said.
Al-Sadhan referred to the role of development funds as an enabler for banks to expand their participation and support for projects without assuming major risk.
“The role of the development fund definitely is to give more comfort to the banking sector to also extend the support … we don’t compete with each other; we always complement each other” he added.
