The Bank of England has unleashed another £150 billion of action to bolster the battered economy and warned that output will fall in the final three months of 2020 as a result of the second lockdown.
Members of the Bank’s Monetary Policy Committee (MPC) voted unanimously to expand its quantitative easing (QE) programme to a mammoth £895 billion, but held rates at the historic low of 0.1%.
It said gross domestic product (GDP) will pick up in the first quarter of 2021, but warned that activity will still remain “materially lower” than before the coronavirus crisis.
The decision came as England began a second national lockdown on Thursday.
Experts fear it could plunge the UK into a double-dip recession, but the Bank’s latest forecasts suggests the economy will narrowly avoid this as activity recovers at the start of next year.
Chancellor Rishi Sunak is also expected to outline further government support for the economy to see it through the latest restrictions when he makes a statement later on Thursday.