UK economy is heading for its worst crash in 300 years

The central bank said on Thursday that the UK economy could shrink by 14% this year. It would be the largest annual contraction since 1706, based on the bank's own best estimate of historical data.

Governor Andrew Bailey said it would respond as needed to support the economy as the threat of coronavirus develops, but did not stop announcing new stimulus measures.

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Europe risks removing its big plans to save the economy
In a report examining the effects of the pandemic, the Bank of England said GDP contracted by 3% in the first quarter of this year and would fall by as much as 25% in the second quarter, leaving the economy about 30% less than it was in the end of 2019. Unemployment is expected to increase to 9%.

The central bank cut interest rates to a record low in March and has launched a £ 200 billion bond program ($ 248 billion) designed to offset the economic shock caused by weekly lockdown and lost production measures.

More measures will probably be taken in the coming months. Two members of the monetary policy committee voted to pump another 100 billion pounds ($ 124 billion) into the stimulus program, and outside economists expect other members to agree once the situation becomes clearer.

The central bank expects a rapid economic recovery next year, but it warned that much depends on how the pandemic develops. If the coronavirus continues to spread and the government is forced to expand or reintroduce lockdowns, much more than £ 100 billion may be needed.

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"The bank could end up going much further," said researchers at Capital Economics.

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