In a statement Thursday, it said it was increasing its government bond-buying program by a further 100 billion pounds ($125 billion). The intention is to keep a lid on interest rates in financial markets and keep money flowing through the financial system.
The bank’s monetary policy committee also kept its main interest rate unchanged at 0.1 percent, as anticipated.
The meeting took place in the wake of figures showing that the UK economy shrank by a fifth in April alone as a result of the country’s lockdown with so many sectors shuttered.
In a statement accompanying the decision, the committee said there has been “evidence from more timely indicators suggests that GDP started to recover thereafter.”
It also said that the unprecedented situation means that the outlook for the UK 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.”
Although some of Britain’s lockdown restrictions are easing, including Monday’s reopening of shops selling nonessential items such as books, sneakers, and toys, the UK economy is set for one of its deepest recessions ever and a consequent big spike in unemployment. Last month, the Bank warned that the UK faced its worst recession since 1706.
In addition to the bank’s support measures, the British government is also readying a big fiscal package for this summer to help the economy, potentially involving a sales tax cut and funding big transport and green projects.
It has already implemented an array of hugely expensive support programs to deal with the initial economic fallout of the CCP virus. The Job Retention Scheme, for example, is widely credited with limiting the number of people losing their jobs. But it is set to end this autumn, and there are worries that firms will start cutting jobs at an accelerating rate through the summer.
Britain has the worst COVID-19 death toll in Europe, at over 42,000, and the Conservative government has been sharply criticized for what many see as its slow, muddled response to fighting the pandemic.
Britain also faces economic risks from its historic decision to leave the European Union, which it did in January. It is in a transition period now with the 27-nation bloc until the end of the year, when it could face trade challenges.
