Bank of England governor Andrew Bailey warns against early end to lockdown

22 April 2020, 11:47

File photo: Bank of England chief Andrew Bailey said Britons should be cautious about easing restrictions
Bank of England chief Andrew Bailey said Britons should be cautious about easing restrictions. Picture: PA

By Megan White

The economy would be hit by a premature end to coronavirus lockdown which would also "damage people's confidence very severely", Bank of England governor Andrew Bailey has warned.

Businesses have argued measures should be eased to allow economic recovery following the coronavirus outbreak, but health authorities have cautioned against any relaxing before Covid-19 testing resources have been increased.

The lockdown could only be lifted after employers were able to ensure staff were safe during their commute and at work, Mr Bailey said.

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He told the Daily Mail that Britons should be cautious about easing restrictions.

Mr Bailey said: "If we had a lifting and then (lockdown) came back again, I think that would damage people's confidence very severely.

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"If we have a false start... that would have potentially quite difficult effects I think.”

His interview came just days after he called for faster lending to businesses.

Last week, the Office for Budget Responsibility said unemployment could hit 3.4 million, leaving around one in 10 of the working population without a job, while the UK economy could fall off a cliff edge.

The fiscal watchdog warned Covid-19 could lead to Britain's economy shrinking by up to 35 per cent between April and June, with Mr Bailey telling reporters the figure was not "implausible".

The BoE had lent £7.6 billion to large firms, as of last Wednesday, as more corporate giants have sought support to stay afloat through the coronavirus crisis.

In addition, more than £1.1 billion of loans have been handed out to smaller UK firms as part of the Coronavirus Business Interruption Loan Scheme (CBILS).

Mr Bailey said the Bank was eager to avoid "scarring" on the economy from Covid-19, adding that support for struggling companies would speed up recovery and prevent long term damage.

"(This) does have to be tackled otherwise we will destroy people's livelihoods and get the scarring that I was just talking about", he said.