Bank of England's chief economist says UK is poised to recover "like a coiled spring"

12 February 2021, 07:06

The Bank of England's chief economist says the UK economy is "poised like a coiled spring" to leave lockdown and predicts annual growth could be in double digits next year.

As European Commission officials expressed cautious optimism that economies on the continent will rebound later this year and in 2022, Andy Haldane wrote in the Daily Mail that Britain will bounce back due to lockdown savings.

Many UK households have significantly improved their finances after being forced to stay home by the pandemic, with the household saving ratio soaring to an all-time high of 29.1% in the second quarter of last year, according to the Office of National Statistics.

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Mr Haldane said if recent trends continued the savings "nest-egg" would be over £250 billion by July.

The Bank last week estimated around 5% of that would leak into the economy but Mr Haldane said he believed the number would be much higher.

"While today the economy is shrinking and inflation is well below target, a year from now annual growth could be in double-digits and inflation back on target.

"The economy is poised like a coiled spring.

"As its energies are released, the recovery should be one to remember after a year to forget."

It comes after Mr Haldane said in November that developments in vaccines for Covid-19 meant the 2021 outlook for the UK economy was "materially brighter".

Meanwhile, the chief of the Armed Forces has warned the pandemic has caused "nationalist barriers" and economic crises which recall the period preceding the Second World War.

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General Sir Nick Carter told the Daily Telegraph: "There has been some unity with the vaccine, but generally speaking people have put up nationalist barriers - and that does not exactly help you with security and stability.

"What you generally find with a crisis like this, which becomes an economic crisis, is that it then undermines the stability and security situation as well.

"What often follows a very significant economic event is a security challenge."

He noted how "significant economic challenges" in the economic crisis caused by the Great Depression led to the "security challenges" of the Second World War.