Economic recovery will be determined by public policy, says BoE’s Haldane
The UK’s path to economic recovery will be determined by the course of public policy, the Bank of England’s chief economist Andy Haldane said today.
“Our economic destiny lies not in the stars but to a significant extent in ourselves, in what policy course we choose,” Haldane said in an online webinar.
“What is done to tackle the issues of employment, to bring forward investment in the economy… to stimulate the economy… generate infrastructure build.”
It comes ahead of the Chancellor’s statement on Wednesday in which he is expected to announce further schemes to support the economy as it recovers from its coronavirus-induced collapse.
Among Rishi Sunak’s announcements is a £3bn green infrastructure package to create jobs and upgrade buildings. He could also reportedly announce a temporary cut to stamp duty to help young people to get on to the lower end of the housing ladder.
Haldane said that the Covid-19 crisis could “tackle some of the deep seated problems that have inflicted our economy”. He cited regional inequality, poor levels of productivity and the “deteriorating” environment as some of the key issues.
While there still remains a huge amount of uncertainty he said that public policy would help guide the path to recovery, but it would also depend on the path of the virus and “how big the second, third and fourth wave peaks” will be.
He described the recovery process will also rely on the “animal spirits” of households and business and how much confidence they have in both their medical and economic health.
Last week the bank’s chief economist said he is on track for a V-shaped recovery since the bounceback had been “sooner and faster” than expected. Today he clarified it was not a “crystal ball forecast” but on data the bank has already seen.
He described a “hefty bounce back” in consumer spending, and while activity is materially below pre-crisis levels, the direction of travel has been upwards so far.