Another big stimulus for UK by Bank of England
The Bank of England recently unveiled another big stimulus for the country as part of its measures to tackle the impact of the COVID-19-induced recession. It decided to raise its government bond-buying programme by a further 100 billion pounds ($125 billion). The aim is to control interest rates in financial markets and allow money flow in the financial system.
The bank’s monetary policy committee also kept its main interest rate unchanged at 0.1 per cent, according to global newswires.
Figures showed the UK economy shrank by a fifth in April alone as a result of the lockdown that resulted in the closing down of several sectors.
In a statement accompanying the decision, the committee said the unprecedented situation means that the outlook for the country and global economies is ‘unusually uncertain’ and will depend “critically on the evolution of the pandemic, measures taken to protect public health, and how governments, households and businesses respond to these factors”.
The bank warned last month that the United Kingdom faced its worst recession since 1706.
The British government is also planning a big fiscal package this summer to help the economy. It has already implemented several expensive support programmes to deal with the initial economic fallout of the pandemic.
The United Kingdom’s public debt is larger than the size of the country’s economy for the first time since 1963, after the government borrowed a record £55 billion in May. The total level of debt has risen by £173 billion over the last year to reach £1.95 trillion, or 100.9 per cent of the gross domestic product.