BOE-Sunak Double Act Attempts to Boost Ailing U.K. Economy
Comment of the Day

November 05 2020

Commentary by Eoin Treacy

BOE-Sunak Double Act Attempts to Boost Ailing U.K. Economy

This article by David Goodman, Alex Morales and Lucy Meakin for Bloomberg may be of interest to subscribers. Here is a section:

The measures aim to counter the impact of a resurgent pandemic that has forced the government to order pubs, restaurants and non-essential shops to shut. With the outlook already clouded by the U.K.’s looming exit from the European Union’s single market -- potentially with no trade deal -- the nation risks a painful spike in joblessness.

Sunak told Parliament that the double injection of stimulus shows “all economic and monetary institutions are playing their part.” Governor Andrew Bailey said in a press conference that it is “important that we take prompt, strong and coordinated action.”

Spending on job support from November to March, along with an increase in help for self-employed workers, could cost around 25 billion pounds, Bloomberg Economics estimates.

Eoin Treacy's view

If the government mandates a lockdown then some remedial action is necessary to blunt the economic hit to consumers and businesses. If the lockdowns and social media are abandoned then everything possible to reflate the economy will need to be done. Therefore, whichever way we look at it, the outlook is for more stimulus. The primary catalyst provided by the pandemic is to promote coordination between the monetary and fiscal authorities. It has ushered in modern monetary theory. 

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