[ad_1]
“I think the long-term effects … would be greater than the long-term effects of Covid,” Bailey said on Monday in response to a question from a lawmaker about what would happen if the UK government does not conclude an agreement before the December 31 deadline.
“It takes a lot longer for what I call the real side of the economy to adjust to the change in openness and the changing profile of the trade,” Bailey added in testimony to the committee. Treasury of Parliament.
The UK left the European Union in January. But the £ 670 billion ($ 895 billion) So far, trade relations have hardly been affected due to a transition period which expires at the end of this year. Negotiators tried to strike a deal that will allow trade to continue without tariffs. But progress has been slow, and EU chief negotiator Michel Barnier warned on Monday that “fundamental differences” have yet to be resolved.
British business groups are pushing Prime Minister Boris Johnson to strike a deal, saying many companies have been pushed to breaking point by the coronavirus and another round of lockdowns. Without a deal with the EU, UK-based companies face tariffs, quotas and other significant hurdles in doing business with the country’s largest export market from January 1.
The Bank of England forecast earlier this month that the UK economy will contract by 11% in 2020. Economists are worried about “scars” from the coronavirus, but Bailey said on Monday he was optimistic as to the economy’s ability to recover relatively quickly from the crisis. pandemic.
A change in the terms of trade with the European Union would lead to a more lasting upheaval, he suggested, comparing this result to the modeling the central bank did decades ago, showing that it would have taken between 30 and 40 years for the British economy to adjust if policymakers had decided to drop the pound sterling and switch to the euro.
The UK government and the Bank of England have unleashed hundreds of billions of pounds of stimulus to help cushion the blow to businesses and workers from the pandemic.
Earlier this month, the central bank announced it would increase its purchases of UK government bonds from £ 150bn ($ 195bn) to £ 875bn ($ 1.1 trillion) , and Finance Minister Rishi Sunak has extended a leave program until March 2021. The government will pay 80% of the wages of employees of companies forced to close, capped at £ 2,500 ($ 3,270) per month .
Sunak said on Sunday that the country’s economic situation presented “a very difficult picture.”
“The economy is under significant stress,” he told the BBC. “We’ve seen it especially in the job market, with people’s jobs. We know that three-quarters of a million people have already tragically lost their jobs with forecasts of more to come. come.”
Sunak will take stock of the economic situation on Wednesday and outline his borrowing and spending plans after the pandemic.
[ad_2]
Source link