The Bank of England has decided this Thursday to inject another dose of strength into the British economy, to contribute to a recovery that the monetary institution itself sees with a little more optimism than it did a month ago. The Monetary Policy Committee (CPM) has announced that it will allocate 110,000 million euros until the end of the year to the purchase of Treasury bonds. This is the policy known as Quantitative Easing, and it will mean in practice that the entity has poured more than 800,000 million euros into the UK market by the end of 2020. “The latest data suggests that the global fall in GDP in 2020 will be less severe than anticipated at the meeting May CPM. There are signs that consumer spending and the production of services are coming back, once the restrictions on economic activity imposed by COVID-19 have begun to relax, “the entity said in its public statement.
This relative optimism, however, does not modify the perception of uncertainty that continues to dominate the country’s future. Its GDP registered a record historical decrease of 20% in April, with an almost absolute freeze and subsequent losses in practically all economic sectors except the pharmaceutical industry.
The eight members of the CPM have unanimously supported keeping the official interest rate at 0.1%, without the slightest concern that, under current circumstances, the 2% year-on-year inflation target set by the monetary authority is at risk. The CPI fell from 1.5% in March to 0.8% in April, reaching 0.5% in May. The Minister of Economy, Rishi Sunak, in coordination with the Bank of England, is currently seeking to speed up the possible escalation of a confinement that was imposed with an evident delay compared to other European countries. “There is a risk that unemployment in the UK will increase and become more persistent. Despite the lifting of some restrictions on economic activity due to covid-19, it is very likely that cautious behavior will continue over time in households and companies. Therefore, both the economy and the labor market will take extra time to regain their previous path, “announced the CPM.
Unlike the first moments of the pandemic, in which the entity injected nearly 70,000 million monthly into the economy, the current calculation estimates that the contributions until the end of the year will be approximately 22,000 million a month.