Britain’s economy is recovering far worse than that of the eurozone and US from the Covid-19 pandemic, the Bank of England governor has said.
Speaking at a hearing of the Treasury Select Committee on Wednesday Andrew Bailey told MP there was a “dramatic” and “stark” difference in economic performance.
Mr Bailey said the UK’s GDP had still not recovered to its 2019 level and was 0.7 per cent smaller than it had been pre-pandemic.
He contrasted this with the eurozone area, whose economy now 2.1 per cent bigger than in 2019.
The US economy had grown even more, he added, with its GDP now 4.2 per cent bigger than it had been at the start of the pandemic.
Economic activity was put into the deep freeze across the world during the Covid-19 pandemic as countries around the world locked down to prevent the spread of the virus.
In most cases growth rebounded sharply after economies reopened, but the UK has not done as well as its neighbours.
“I’m afraid it’s not a good story I’m about to tell you: the level of UK GDP now versus the pre Covid level, compared to other economies is think -0.7 per cent,” Mr Bailey told MPs.
“So in other words, the economy is smaller than it was at the end of 2019 in terms of GDP. The euro area is plus 2.1 and the US on the latest number, which is just come out, is plus 4.2.
“It is a dramatic difference. I think there’s probably quite a few things account for it: the approach that’s been taken towards energy prices, fiscal support, the US has had a lot of fiscal support and is in a very different position in terms of the economy.
“So there’s probably quite a lot of things contributing to it, but it’s pretty striking.”
Mr Bailey was speaking on the same day the Office for National Statistics showed soaring food and energy prices had driven UK inflation to a 40-year high of 11.1 per cent.
