Global economic outlook has ‘deteriorated materially’

Andrew Bailey, governor of the Bank of England, has said the global economic outlook has deteriorated materially after surging commodity prices pushed up inflation around the world.

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LONDON — The governor of the Bank of England said Tuesday that the global economic outlook has “deteriorated materially” and warned of possible further shocks to come.

Andrew Bailey blamed Russia’s invasion of Ukraine for piling further pressure on commodity prices and already rising inflation, and said that further resilience is needed to mitigate future risks.

“The global economic outlook has deteriorated materially,” Bailey said at a briefing at the Bank of England.

“It is the right time to lock in resilience so that we are well prepared for future possible shocks,” he added.

The warning came as the central bank published its Financial Stability Report Tuesday, in which it outlined a number of risks to the U.K.’s economic outlook. Those include ongoing disruption to food and energy markets as a result of the war, high household and government debt, as well as the continued impacts of Covid-19 in China.

We expect households and businesses to become more stretched over coming months.

Andrew Bailey

governor, Bank of England

The BOE, alongside other central banks, has been raising interest rates in a bid to bring down high prices. However, Bailey acknowledged that this had made the economic landscape harder for households and businesses, and that there was little sign of let up in the near-term.

“These higher prices, weaker growth and tighter financing conditions will make it harder for households and businesses to repay or refinance debt,” he said.

“Given this, we expect households and businesses to become more stretched over coming months. They will also be more vulnerable to further shocks,” he said.

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Source: https://www.cnbc.com/2022/07/05/bank-of-england-global-economic-outlook-has-deteriorated-materially.html