JP Morgan: Bank of England and UK chancellor extend support for the economy
With new restrictions to contain the virus coming into place in the UK, the economy is likely to contract in the fourth quarter, albeit to a far lesser extent than earlier in the year.
Last week’s announcements from the UK chancellor and Bank of England are vital steps to shelter the economy through a difficult winter. The extension of the furlough scheme until the end of March will help provide a much needed bridge for households and businesses until the economy can reopen. The Bank announced that it would expand its asset purchases by an additional £150 bn, enabling the government and businesses to continue to finance themselves at favourable rates. Policy support is ramping up, but fundamental research will still be required to identify companies that have sufficiently robust balance sheets to withstand the challenges ahead.
Source: Bank of England, ONS, Refinitiv Datastream, J.P. Morgan Asset Management. Data as of 6 November 2020.