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Bank of England upgrades its outlook for the UK economy

The Bank of England voiced cautious optimism about the UK’s economic outlook in the wake of a sharp fall in coronavirus infections and the rapid rollout of the nation’s COVID-19 vaccination program.

In a statement, the policymaking Monetary Policy Committee noted some “positive” recent economic developments as it kept the bank’s main interest rate unchanged at the record low of 0.1 per cent . All nine members of the committee also voted against any further increase in the bank’s bond-buying program.

The UK economy has been savaged by the coronavirus but the Bank of England sees brighter days ahead.

The UK economy has been savaged by the coronavirus but the Bank of England sees brighter days ahead.Credit:AP

The decision to keep interest rates on hold had been widely predicted in financial markets following Britain’s improved coronavirus situation.

“The rates of COVID infections and hospitalisations have fallen markedly across the United Kingdom and the vaccination program is proceeding at a rapid pace,” the committee said in minutes published alongside the decision. “Looking ahead, the expected easing of COVID restrictions made it likely that there would be increases in both supply and demand over the coming months.”

The combination of falling coronavirus infections — new cases are running at around 5000 a day against a peak of nearly 70,000 a day in early January — and the rapid rollout of vaccines has spurred hopes about a pick-up in economic activity in the spring as lockdown restrictions are lifted.

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The turnaround is notable since Britain has had Europe’s deadliest coronavirus outbreak, with around 126,000 dead.

The British government, which is responsible for the lockdown in England, has laid out a path for easing restrictions over the coming weeks but insists that it will be guided by the “data, not dates.” The other nations of the UK — Scotland, Wales and Northern Ireland — are following similar lockdown easing timetables.

By mid-April, the British government hopes that retailers in England selling nonessential items, such as footwear and books, will be able to reopen. Pubs are also set to reopen outdoors from that date, with indoor serving following on May 17.

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