Economic Review – March 2020

The Bank of England (BoE) sanctioned two emergency rate cuts during March in a bid to address the impact of the COVID-19 pandemic, leaving interest rates at a historic low of 0.1%.

Survey evidence suggests the UK economy is shrinking at a record pace following the forced shutdown of businesses across the service sector in face of the COVID-19 crisis.

March was a challenging month for global markets, as investors assessed the economic damage from the pandemic. Although some indices have rallied in the last week or so, they largely remain down over the month and the quarter. Many central banks have taken decisive fiscal and monetary action to shore up economies, which, to some extent, has served to stabilise financial markets, but as the virus spreads, large-scale uncertainty remains.

The latest batch of UK inflation statistics shows that February’s headline rate fell, with economists predicting a further sharp decline over the coming months.

Official figures show that UK retail sales stagnated in February even before the imposed shutdown that is now expected to prompt an inevitable slump in sales in the coming months..