They pointed out that the British economy had recovered about half of the huge loss in production that occurred as a result of the outbreak of the Corona virus, and they expected that Britain’s exit from the European Union would make financial markets less efficient, but it would not be a disaster for the economy.
Andy Holden, chief economist at the Bank of England, said on Monday that the British economy has recovered about half of the massive production losses that occurred last March and April during the height of public isolation measures due to the outbreak of the Coronavirus.
Holden told members of the British Parliament, “We have recovered nearly half of the 25% loss of activity that occurred in the months of March and April last, over the period since then.”
He added, he believes that the economy is now growing by about 1% per week, based on surveys of companies and less traditional figures such as traffic and transportation data.
Holden was the only one of the nine MPC members to oppose last month’s expansion of the Bank of England’s asset-purchase program.
However, he said that unemployment is increasing rapidly and may now reach about 6% compared to 3.9% in the latest official data.
“There were some disruptions in the domestic and global supply chains, which increased the costs of some goods and services,” Holden told parliament’s Treasury Affairs Committee.
He stressed his concern that unemployment could rise to its highest level since the mid-1980s because the long-term effects of Covid-19 reduce demand for retail and hospitality workers.
For his part, Jonathan Hall, a candidate for the membership of the Bank of England’s Financial Policy Committee, said Monday that Britain’s exit from the European Union would make the markets less efficient but would not be catastrophic for the British economy.
Britain left the European Union last January in accordance with transitional arrangements, allowing continued full access to the bloc, ending in December.
Hall told a hearing of the confirmation of his appointment held by Parliament’s Treasury Affairs Committee, that Britain’s exit from the European Union would cause fragmentation and inefficiency and there would be problems with regulation, but it would not be disastrous for the economy.
He added that the British financial sector was “completely different” in size and sophistication compared to its European counterparts.
Direct access to the European Union for financial firms in Britain in the future depends on Britain remaining a “peer” or in line with the rules in Europe, but Hall said Britain could not be “a recipient of orders.”
He added, “It is extremely important that the UK remains the regulator of the UK financial market.”
And at the beginning of this month, the European Commission said that the negotiations after Britain’s exit from the European Union had made only “little progress”, and there are still many differences between the European Union and Britain.
The two sides are negotiating an agreement after Britain leaves the European Union to facilitate trade between the two sides, but with stark differences in some areas, the “failure to reach agreement” scenario becomes an increasing possibility.
Regardless of the results of the ongoing talks, there will be inevitable changes on January 1 of a set of issues that the European Commission has warned companies, countries and individuals to prepare for.
These areas include customs procedures that will be applied even if an ambitious trade agreement is reached, or permits for goods and services.
After a week of discussions with British negotiator David Frost, European Union chief negotiator Michel Barnier said there were still “significant differences” between Britain and the European Union.
British Prime Minister Boris Johnson told German Chancellor Angela Merkel during a telephone conversation that Britain is ready to leave the European Union on the basis of the same conditions that exist between the bloc and Australia if it is unable to reach a trade agreement for the future.
Australia does not have a comprehensive trade agreement with the European Union, and most trade flows between the union and Australia are regulated by World Trade Organization rules, although there are some agreements on certain goods.