V-shaped recession forecast is good news but not the start of a golden period for UK

V-shaped recession forecast is good news but not the start of a golden period for UK

If the Bank of England is right, Britain is on course for its strongest annual growth since 1941 – the year of Pearl Harbor and Hitler’s invasion of Russia.

The latest forecasts from Threadneedle Street are stronger in every respect than those it came up with three months ago: the hit to growth during the first-quarter lockdown has been less severe; the bounce back will be more rapid; the peak in unemployment will be significantly lower.

This represents a classic V-shaped recession – a deep plunge in output followed by a fast recovery. It took half a decade for national output to regain its pre-crisis peak after the financial crash of 2008, but this time it will do so in less than two years. That, as the Bank’s governor, Andrew Bailey, pointed out is “very good news” because it means fewer people lose their jobs and fewer businesses go bust.