Bank of England’s Bailey says risks are very much to the downside

Bank of England’s Bailey says risks are very much to the downside

© Reuters. FILE PHOTO: Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at the Central Bank in London

LONDON (Reuters) – Bank of England Governor Andrew Bailey said on Thursday that risks to Britain’s economy were “very much on the downside” as it tries to extend its recovery from the coronavirus crisis.

Bailey told an online webinar hosted by the European Commission that British gross domestic product in the third quarter was probably 7-10% below its pre-pandemic levels, echoing comments he made two weeks ago.

While that represented a recovery from a fall of more than 20% earlier in the year, the bounce-back had been very uneven as some sectors continued to face restrictions and represented a very big recession.

“There is an unprecedented level of uncertainty at the moment. And the risks, I’m afraid — certainly as we see them — are very much on the downside,” Bailey said, citing the recent rise of COVID-19 cases in Britain.

Asked about the prospect of a trade deal between Britain and the European Union before a post-Brexit transition ends on Dec. 31, Bailey said it was vital that economies remained open.

“Nobody benefits from protectionism in my view,” he said.

Britain’s post-Brexit transition would not be easy and “would have been easier had we not have to deal with COVID,” Bailey said.

In a newspaper interview published earlier on Thursday, he said he believed Britain and the EU should be able to reach a trade deal, and that he did not expect the new wave of coronavirus cases to be as damaging as the first.

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