Bank of England governor Andrew Bailey said on Thursday the regulator was not out of firepower to handle the “downside” risks faced by the economy as the country eyes a second wave of the Covid-19 crisis.
The economy’s recovery has been “very uneven,” with different sectors gaining more than others, Mr Bailey told an online webinar hosted by the Single Resolution Board, saying Britain’s gross domestic product in the third quarter was probably 7 to 10 per cent below its pre-pandemic levels.
There is an unprecedented level of uncertainty at the moment. And the risks, I'm afraid ... are very much on the downside.
“We are by no means out of firepower … in terms of our policy tools, and we will use that firepower, as appropriate, promptly and strongly in response to second and third waves where we think it is necessary and appropriate to do so,” Mr Bailey said.
"There is an unprecedented level of uncertainty at the moment. And the risks, I'm afraid – certainly as we see them - are very much on the downside.”
Britain experienced a record decline in economic output in the second quarter of this year, suffering a GDP contraction of 19.8 per cent in the three months to June - the biggest drop since Office for National Statistics data began in 1955.
While Mr Bailey’s GDP figures for the third quarter indicate a recovery from that dramatic second-quarter fall, he said the country is still in “a very big recession” with the economic recovery from the height of the pandemic “very uneven”.
The summer saw a “strong recovery” linked to the lifting of restrictions, he said, with some sectors gaining more than others depending on whether they relied on close social interaction.
“Other areas have recovered very strongly,” he said, “and are actually ahead of where they were pre-Covid.”
The pandemic will have a lasting effect, Mr Bailey warned, and he said “scarring” from the crisis is hard to judge, as past experience has shown that consistent unemployment can cause real damage in labour markets and lost outputs.
“How large and how long that will be is obviously a key issue,” he said.
Britain has been criticised for acting later than its European counterparts to implement restrictions at the start of the crisis – a move that saw it pay a heavy human and economic cost.
Last month, the BoE held interest rates at a record low of 0.1 per cent, as Mr Bailey said it did not intend to tighten monetary policy until economic conditions improve.
The UK regulator also left the size of its bond-buying programme unchanged at £745 billion ($965.05bn). The BoE hinted that negative interest rates to offset the effects of Covid-19 were in its monetary policy toolbox.
Going forward, Mr Bailey said the bank must use monetary policy “actively and expressively” in response to second and third waves.
“The crisis came upon us very quickly and in my view economic policy has done its job … looking across monetary policy, fiscal policy and instability policy, we use the tools very aggressively,” he said.
During the virtual webinar, which saw Mr Bailey make the ultimate remote working error of failing to unmute his speaker, the governor also said banks should not be uneasy about dipping into their capital buffers to ensure they can continue lending to the coronavirus-hit economy.
The key message to the banking sector is that capital buffers are there to be used at a time like the present, he said.
"I understand there is a natural unease to do that. Given the history of this, given the financial crisis, it's a brave person who says yes, I am going to run my capital ratio down," Mr Bailey said. "We have to use the stress test to demonstrate that is a realistic and sensible policy.”
Bailey said the current crisis had been the "first really big test" of reforms such as increased capital requirements introduced after the global financial crisis of 2008-09, with evidence those reforms achieved what they set out to do.
Sean Berrigan, head of the European Commission's financial services unit, agreed that eurozone banks were in a much better position to weather the Covid-19 crisis than they were a decade ago.
"We don't expect a 2008 experience, but we cannot rule that there will be problems with individual banks ... We are reassured that we are not going to face a wave of insolvencies," Mr Berrigan said.
The BoE’s September Financial Policy Committee meeting concluded that the UK banking system remains resilient and has the capacity to continue to support households and businesses.
“This reflects the build-up since the global financial crisis of substantial buffers of capital,” according to a summary of the meeting published on Thursday. Even if "the recent economic disruption were to be followed by events with an economic impact worse than that seen since March, and unemployment were to rise to around 15 per cent, the cumulative losses incurred by the major UK banks and building societies since the beginning of the pandemic would deplete only around 60 per cent of their buffers of capital.”
On the prospect of a trade deal between Britain and the European Union before a post-Brexit transition ends on December 31, Mr Bailey told the webinar it was vital that economies remained open.
"Nobody benefits from protectionism in my view," he said. “[Britain's post-Brexit transition] would have been easier had we not had to deal with Covid.”
Results
Stage three:
1. Stefan Bissegger (SUI) EF Education-EasyPost, in 9-43
2. Filippo Ganna (ITA) Ineos Grenadiers, at 7s
3. Tom Dumoulin (NED) Jumbo-Visma, at 14s
4. Tadej Pogacar (SLO) UAE-Team Emirates, at 18s
5. Joao Almeida (POR) UAE-Team Emirates, at 22s
6. Mikkel Bjerg (DEN) UAE-Team Emirates, at 24s
General Classification:
1. Stefan Bissegger (SUI) EF Education-EasyPost, in 9-13-02
2. Filippo Ganna (ITA) Ineos Grenadiers, at 7s
3. Jasper Philipsen (BEL) Alpecin Fenix, at 12s
4. Tom Dumoulin (NED) Jumbo-Visma, at 14s
5. Tadej Pogacar (SLO) UAE-Team Emirates, at 18s
6. Joao Almeida (POR) UAE-Team Emirates, at 22s
Rebel%20Moon%20-%20Part%20One%3A%20A%20Child%20of%20Fire
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EZack%20Snyder%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3ESofia%20Boutella%2C%20Djimon%20Hounsou%2C%20Ed%20Skrein%2C%20Michiel%20Huisman%2C%20Charlie%20Hunnam%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2%2F5%3C%2Fp%3E%0A
Paris Can Wait
Dir: Eleanor Coppola
Starring: Alec Baldwin, Diane Lane, Arnaud Viard
Two stars
How to improve Arabic reading in early years
One 45-minute class per week in Standard Arabic is not sufficient
The goal should be for grade 1 and 2 students to become fluent readers
Subjects like technology, social studies, science can be taught in later grades
Grade 1 curricula should include oral instruction in Standard Arabic
First graders must regularly practice individual letters and combinations
Time should be slotted in class to read longer passages in early grades
Improve the appearance of textbooks
Revision of curriculum should be undertaken as per research findings
Conjugations of most common verb forms should be taught
Systematic learning of Standard Arabic grammar
The BIO:
He became the first Emirati to climb Mount Everest in 2011, from the south section in Nepal
He ascended Mount Everest the next year from the more treacherous north Tibetan side
By 2015, he had completed the Explorers Grand Slam
Last year, he conquered K2, the world’s second-highest mountain located on the Pakistan-Chinese border
He carries dried camel meat, dried dates and a wheat mixture for the final summit push
His new goal is to climb 14 peaks that are more than 8,000 metres above sea level
Know your cyber adversaries
Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.
Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.
Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.
Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.
Phishing: Aims to secure personal information, such as passwords and credit card numbers.
Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.
Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.
Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.
Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.
Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.
Zero-day exploit: Exploits a vulnerability in software before a fix is found.
LIVING IN...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Pros%20and%20cons%20of%20BNPL
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COMPANY%20PROFILE
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SPEC%20SHEET
%3Cp%3E%3Cstrong%3EProcessor%3A%3C%2Fstrong%3E%20Apple%20M2%2C%208-core%20CPU%2C%20up%20to%2010-core%20CPU%2C%2016-core%20Neural%20Engine%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EDisplay%3A%3C%2Fstrong%3E%2013.6-inch%20Liquid%20Retina%2C%202560%20x%201664%2C%20224ppi%2C%20500%20nits%2C%20True%20Tone%2C%20wide%20colour%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EMemory%3A%3C%2Fstrong%3E%208%2F16%2F24GB%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStorage%3A%3C%2Fstrong%3E%20256%2F512GB%20%2F%201%2F2TB%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EI%2FO%3A%3C%2Fstrong%3E%20Thunderbolt%203%20(2)%2C%203.5mm%20audio%2C%20Touch%20ID%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EConnectivity%3A%3C%2Fstrong%3E%20Wi-Fi%206%2C%20Bluetooth%205.0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBattery%3A%3C%2Fstrong%3E%2052.6Wh%20lithium-polymer%2C%20up%20to%2018%20hours%2C%20MagSafe%20charging%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECamera%3A%3C%2Fstrong%3E%201080p%20FaceTime%20HD%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EVideo%3A%3C%2Fstrong%3E%20Support%20for%20Apple%20ProRes%2C%20HDR%20with%20Dolby%20Vision%2C%20HDR10%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EAudio%3A%3C%2Fstrong%3E%204-speaker%20system%2C%20wide%20stereo%2C%20support%20for%20Dolby%20Atmos%2C%20Spatial%20Audio%20and%20dynamic%20head%20tracking%20(with%20AirPods)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EColours%3A%3C%2Fstrong%3E%20Silver%2C%20space%20grey%2C%20starlight%2C%20midnight%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIn%20the%20box%3A%3C%2Fstrong%3E%20MacBook%20Air%2C%2030W%20or%2035W%20dual-port%20power%20adapter%2C%20USB-C-to-MagSafe%20cable%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh4%2C999%3C%2Fp%3E%0A
Match info
Manchester United 0-0 Crystal Palace
Man of the match: Cheikhou Kouyate (Crystal Palace)
The specs: 2018 Infiniti QX80
Price: base / as tested: Dh335,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 400hp @ 5,800rpm
Torque: 560Nm @ 4,000rpm
Fuel economy, combined: 12.1L / 100km
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
Read more from Kareem Shaheen
High profile Al Shabab attacks
- 2010: A restaurant attack in Kampala Uganda kills 74 people watching a Fifa World Cup final football match.
- 2013: The Westgate shopping mall attack, 62 civilians, five Kenyan soldiers and four gunmen are killed.
- 2014: A series of bombings and shootings across Kenya sees scores of civilians killed.
- 2015: Four gunmen attack Garissa University College in northeastern Kenya and take over 700 students hostage, killing those who identified as Christian; 148 die and 79 more are injured.
- 2016: An attack on a Kenyan military base in El Adde Somalia kills 180 soldiers.
- 2017: A suicide truck bombing outside the Safari Hotel in Mogadishu kills 587 people and destroys several city blocks, making it the deadliest attack by the group and the worst in Somalia’s history.
Francesco Totti's bio
Born September 27, 1976
Position Attacking midifelder
Clubs played for (1) - Roma
Total seasons 24
First season 1992/93
Last season 2016/17
Appearances 786
Goals 307
Titles (5) - Serie A 1; Italian Cup 2; Italian Supercup 2
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Two-step truce
The UN-brokered ceasefire deal for Hodeidah will be implemented in two stages, with the first to be completed before the New Year begins, according to the Arab Coalition supporting the Yemeni government.
By midnight on December 31, the Houthi rebels will have to withdraw from the ports of Hodeidah, Ras Issa and Al Saqef, coalition officials told The National.
The second stage will be the complete withdrawal of all pro-government forces and rebels from Hodeidah city, to be completed by midnight on January 7.
The process is to be overseen by a Redeployment Co-ordination Committee (RCC) comprising UN monitors and representatives of the government and the rebels.
The agreement also calls the deployment of UN-supervised neutral forces in the city and the establishment of humanitarian corridors to ensure distribution of aid across the country.
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UAE currency: the story behind the money in your pockets
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
UAE currency: the story behind the money in your pockets
