Gertjan Vlieghe, a member of the Bank of England's (BoE) Monetary Policy Committee, said the economy should recover once the coronavirus pandemic is over.
Gertjan Vlieghe, a member of the Bank of England's (BoE) Monetary Policy Committee, has warned that the UK economy is set to suffer the deepest contraction in over a hundred years, but said it should recover once the coronavirus pandemic is over.
Vlieghe said: "Based on the early indicators, and based on the experience in other countries that were hit somewhat earlier than the UK, it seems that we are experiencing an economic contraction that is faster and deeper than anything we have seen in the past century, or possibly several centuries."
Vlieghe added that the COVID-19 virus, and the lockdown, had created both a supply shock and a demand shock. But he said it should recover "approximately to the pre-virus trajectory."
Earlier today, IHS Markit's preliminary report showed that the UK business activity dropped to record lows in both manufacturing and services due to shutdowns.
The data firm's UK Composite PMI, which tracks activity across the economy, slumped to just 12.9 for April - down from 36 in March.
That's the worst reading since Markit started recording this data more than 20 years ago.
Chris Williamson, chief business economist at IHS Markit, said: "Business closures and social distancing measures have caused business activity to collapse at a rate vastly exceeding that seen even during the global financial crisis, confirming fears that GDP will slump to a degree previously thought unimaginable in the second quarter due to measures taken to contain the spread of the virus.
“Simple historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with GDP falling at a quarterly rate of approximately 7%.
"The actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector, which have been especially hard-hit by the COVID-19 containment measures."
