Bank of England warns outlook for UK economy remains unusually uncertain

The Bank of England has warned that tougher restrictions than it envisaged to get a grip on coronavirus will weigh on the UK's economic recovery next year, Sky News reports.

Minutes of the last monetary policy committee meeting, which resulted in a unanimous vote to maintain interest rates at their crisis low of 0.1 percent, showed concern that post-lockdown measures would inflict greater damage than the Bank had feared in November.

Those forecasts - released last month as the Bank bolstered its bond-buying stimulus - predicted a peak jobless rate of 7.75 percent by the second quarter of next year.

It envisaged that a plunge of up to 11 percent in gross domestic product (GDP) during 2020 would be capped off by a lockdown-enforced dip in the current final quarter.

However, the Bank's expectation was that it would be followed by growth of 2.1 percent in the first quarter of 2021, averting a double-dip recession.

It said that while vaccine developments were "likely to reduce the downside risks to the economic outlook,'' it added that "recent global activity has been affected by the increase in coronavirus patients and associated reimposition of restrictions."

A section of the summary of its meeting read: "The outlook for the economy remains unusually uncertain.

"It depends on the evolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, the new trading arrangements between the European Union and the United Kingdom.

"It will also depend on the responses of households, businesses and financial markets to these developments."-Photo: Sky News