A Reuters survey revealed that economists believe the UK economy will fail to recover to pre-crisis levels, even within two years.
This is because the only thing that can affect the acceleration of economic growth is negative interest rates, and last quarter, when the quarantine measures were as severe as possible, there was a record economic decline of 20.4%. Thus, when the restrictions were lifted, it was assumed that economic indicators would grow by about 15.1% already in this quarter.
However, earlier this month, the Bank of England said the economy will not return to its previous level until the end of 2021. 20 out of 23 economists also said recovery would take at least two years, and only three suggested that a couple of years would be enough.
In addition, the economy shrank 9.7% this year, and forecasts say that it can probably only grow 6.2% in 2021.
"Unlike Bank of England chief economist Andy Haldane, who thinks it's time to see the glass half full, the recent data has put us in a pessimistic mood again," said HSBC's Elizabeth Martins.
To bolster the economy, the government has raised spending to record amounts, chief among which was to pay 80% of payroll bills if employees are sent on vacation rather than fired. Unfortunately, the program will end at the end of October.
"The job cuts planned for the fall are already growing. And that will make things worse, "said Peter Dixon of Commerzbank.
The current economic downturn has forced companies to cut thousands of jobs, thereby peaking unemployment to 8.0% in the fourth quarter.
For its part, the Bank of England reduced borrowing costs to 0.10%, and resumed buying assets.
Bank of England governor Andrew Bailey said that negative interest rates used by the ECB and the Bank of Japan were part of the bank's measures, but so far he has no plans to use them yet.
Thus, interest rate is predicted to remain at 0.10% until at least 2023, and regarding possible negative interest rates, the probability percentage is only 22.5%.
