LONDON (Reuters) – Bank of England Governor Andrew Bailey said on Tuesday that Britain’s economy was facing its “darkest hour”, and played down suggestions that cutting interest rates below zero would be a straightforward way to boost growth.
He said a resurgence in COVID-19 cases meant there would be a difficult few months ahead – although a recovery was within sight once COVID-19 vaccines were rolled out.
His comments followed finance minister Rishi Sunak’s warning on Monday that the economy would likely get worse before it got better, with the country now in its third national lockdown and struggling to contain the spread of the coronavirus.
“There’s an old saying about the darkest hour is the one before dawn,” Bailey said in an online speech to the Scottish Chambers of Commerce.
“(We’re) in a very difficult period at the moment and there’s no question that it’s going to delay, probably, the trajectory.”
He declined to say if this pointed towards more stimulus at the BoE’s Feb. 4 policy decision, stressing that officials would have a lot more data to review before then.
Sterling jumped against the euro and dollar as Bailey said there were “lots of issues” with negative interest rates, the merits of which are being debated by members of the Monetary Policy Committee. [GBP/]
Most economists think Britain’s economy is likely to tip back into recession – shrinking in the final quarter of 2020 and the first quarter of 2021 – following a record 25% fall in output in the first two months of lockdown last year.
Bailey said the BoE’s “best guess” was that economic output in the last three months of 2020 was flat to slightly down.
LENDING VOLUMES
Bailey also said that he believed Britain’s official jobless statistics understated the true rate of unemployment, due to the difficulty surveys currently had distinguishing between jobless people who were and were not actively seeking work.
The true unemployment rate was probably closer to 6.5% than the 4.9% in the latest official figures, he said.
Bailey said economic activity during the first quarter would be depressed until COVID-19 vaccines were widespread enough to allow some lockdown restrictions to ease, but the economy was still likely to recover broadly as expected last year.
The death toll in the United Kingdom has been soaring and now stands in excess of 81,000 – the world’s fifth-highest official toll – while more than 3 million people have tested positive.
Bailey struck a more sceptical tone on the possibility of bringing negative interest rates to Britain than fellow BoE rate-setter Silvana Tenreyro who on Monday outlined possible benefits from such a policy.
“In simple economics and maths terms, there is nothing to stop it at all. However there are a lot of issues with it,” he said.
Bailey said negative rates – the subject of a feasibility review by the BoE – would complicate banks’ efforts to earn a rate of return, potentially hurting their lending to companies, and that it was not easy to draw a direct parallel with similar action in the euro zone.
Deputy Governor Ben Broadbent, who also spoke on Tuesday, said the key judgment would be whether negative rates risked lowering lending volumes by reducing banks’ profitability.
Bailey also said the BoE had seen anecdotal evidence of disruption caused by Britain’s departure from the European Union at the turn of the year, and it was hard to tell how serious this would prove as early January typically represented a lull in freight traffic.
(Reporting by David Milliken; Writing by Andy Bruce; Editing by William Schomberg and Alison Williams)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
