British economy faces long haul to recovery: Poll 

Last quarter, when a lockdown to quell the spread of the virus was at its tightest, the economy shrank a record 20.4%.

Britain’s economy will not fully recover from its current historic downturn for at least two years, a Reuters poll of economists found, but there is only a slim chance the Bank of England will use negative interest rates to boost the upswing.

Britain has suffered the highest death toll from the coronavirus in Europe, leading to criticism of the UK government’s response to the pandemic.

Last quarter, when a lockdown to quell the spread of the virus was at its tightest, the economy shrank a record 20.4%.

But as many restrictions have been lifted, it was expected to expand 15.1% this quarter, the poll showed.

“The severity of the slump was chiefly a by-product of the very long lockdown in the UK, necessitated by the government’s laissez-faire attitude in the early days of the pandemic, which meant the virus spread more widely than in other countries,” said Samuel Tombs at Pantheon Macroeconomics.

Earlier this month the Bank of England (BoE) said the economy would not recover to its pre-pandemic size until the end of 2021, but 20 of 23 economists who responded to an extra question said it would be at least two years before that happened. Only three said within two years.

After contracting 9.7% this year - more than most of its peers and more than the 9.1% forecast last month - the economy will expand 6.2% in 2021, the poll of nearly 70 economists predicted. In a worst-case scenario, it will contract 14.2% this year.

“Unlike BoE chief economist Andy Haldane, who thinks it is now time to see the economic glass as half-full, recent data outturns have made us more pessimistic about the lasting economic impact,” said Elizabeth Martins at HSBC.