Andy Haldane, economist at the Bank of England, says pessimistic views of the economy are in danger of impeding the post-lockdown economic recovery in the UK.
“The encouraging news about the present should not be filled with fears for the future,” he said in a speech.
Compare the negative predictors with the character of children’s stories who fear the fall of the sky.
“Now is not the time for chicken economics to letkin,” he said.
“What worries me at the moment is that the good news about the economy is crowded with concerns about the future,” he added.
“Group anxiety is contagious, and it can harm our well-being, like this terrible disease.”
Haldane said the UK faced an “unholy trio of risks from Covid, unemployment and Brexit,” but it was important not to overlook the faster-than-expected economic recovery from the lockdown.
“The economy has already recovered just under 90% of its previous losses. After falling sharply by 20% in the second quarter, we expect UK GDP to rise by 20% in the third quarter – its largest ever, he said.
However, he admitted that the economic news was not all positive, with job losses continuing to mount, while the recovery in consumer spending did not match companies.
- The Bank of England policymaker defends the negative rates
- The deputy governor of the bank warns of negative rates
Its latest intervention comes amid mounting speculation that the Bank of England is considering cutting interest rates so much that they drop below zero.
At present, the bank’s rate is at an all-time low of 0.1%.
Various members of the bank’s monetary policy committee have brought up both sides of the debate in recent days.
In his speech on Wednesday, Haldane said that none of the conditions justifying negative interest rates had been met.