The new COVID-19 restrictions will put the economic recovery on ice for the next few months and will prevent the economy from climbing back to its pre-crisis level until the end of 2022. The possibility of even tighter COVID-19 restrictions and of a no deal Brexit at the end of the year mean there’s a risk that the recovery goes into reverse. What’s more, as some of the government’s support measures expire, this next phase of the recovery will be more painful for households and businesses. That’s why we think the Bank of England will expand QE by a further £250bn by the end of 2021 and won’t raise interest rates above 0.10% until 2025.
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