Avoiding Economic Anxiety
Speech given by
Andy Haldane
Chief Economist and Member of the Monetary Policy Committee (MPC)
Cheshire and Warrington LEP Economic Summit Webinar
30 September 2020
The views expressed here are not necessarily those of the Bank of England or the Monetary Policy
Committee. I would like to thank Jack Meaning and Andre Moreira for their help in preparing the text.
I would like to thank Andrew Bailey, Frances Cassidy, Alan Castle, Shiv Chowla, Liam Crowley-Reidy,
Jon Cunliffe, Harvey Daniell, Pavandeep Dhami, Simon Hayes, Saurav Kamath, Zaar Khan, Simon
Kirby, Nick Mclaren, Becky Maule, Shahid Nazir, Mette Nielsen, Douglas Rendle, Michael Saunders,
Michal Stelmach and Jan Vlieghe for their comments.
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Thank you for the invitation to speak at this Cheshire and Warrington Local Enterprise Partnership (LEP)
Economic Summit. Through my colleague on the Industrial Strategy Council and former Chair of the LEP,
Christine Gaskell, I know the excellent work the LEP does in supporting the local economy and community.
That support has never been more important given the risks facing individuals, businesses and communities.
Given those risks, I thought I would focus today on the economic outlook in the UK, updated in the light of
the Bank's
events since the publication of Monetary Policy Report in August. Plenty has since happened.
But one factor has remained the same: the extra-ordinary degree of uncertainty about the economic outlook.
That makes monitoring the economy closely, and setting policy to support it, more important than ever.
At present, the largest clouds on the economic horizon in the UK come from: the effects of rising numbers of
Covid cases across the UK and the accompanying policy measures taken to contain them; risks to business
activity and jobs in the light of these public health developments; and the effects of moving to new trading
arrangements with the EU at year-end. This unholy trinity of risks give good grounds for caution.
Some degree of caution is desirable - in how we socialise, shop and work - to prevent the spread of this
awful disease. But we need at the same time to prevent healthy caution morphing into fear and fatalism.
Pessimism can be as contagious as the disease - and as damaging to our economic fortunes. Avoiding
economic anxiety is crucial to support the on-going recovery. This has important implications for how
businesses and policymakers act and communicate.
The Fall and Rise of the UK Economy
Let me start by running through the fortunes of the economy so far this year. The early months saw a
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collapse in UK economic activity unprecedented in its speed and scale a fall in GDP of around a quarter in
a matter of weeks. This recession was unique in its source as well as its speed and scale. An extreme
shock to public health required extreme public health measures, restricting the flow of goods, services and
people. Large parts of the economy were, in effect, put into a policy-induced coma.
The resulting collapse in aggregate demand would ordinarily have resulted in huge numbers of job losses.
Okun's
Economists call the relationship between demand and jobs Law.1 Historically, the Okun coefficient is
found to lie around 0.5-0.6. On that basis, the 25% fall in output would have been expected to lower
employment by perhaps 12-15% and to raise the unemployment rate by maybe 10 percentage points, taking
the pool of unemployed workers to around 5 million.
The Government's job support
packages, notably the Coronavirus Job Retention Scheme (CJRS), avoided
this catastrophic outcome. The CJRS provided support to around 9 million workers at its peak, in addition to
which income support was provided to around 2 1⁄2 million self-employed workers. Currently, it is estimated
1
See Okun (1962)
2
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that around 2.75 million workers remain on furlough. The CJRS will end next month, to be replaced with the
Job Support Scheme (JSS) announced by the Chancellor last week.
Data from the ONS's Labour Force Survey
Of course, not all jobs have or could have been protected. (LFS)
is, at present, difficult to interpret when gauging employment trends. But based on HMRC data on paid
employees, around 700,000 workers may have been laid-off, in addition to around 280,000 self-employed
workers. That means around 1 million workers in total may so far have lost their jobs. This figure, more than
any other, underlines the gravity of the shock the UK economy has faced this year.
The better news is that the economy began its recovery from this dramatic fall earlier, and has since
of the UK's
recovered far-faster, than anyone expected. The speed and scale recovery has surprised to the
upside, persistently and significantly, for at least the past four months. Back in May, the Bank expected GDP
to be around 18% below its pre-Covid level on average during the third quarter. Consensus forecasts by
professional economists were, at the time, weaker still.
Four months on, we now expect GDP to be around 3-4% below its pre-Covid level by the end of the third
quarter. In other words, the economy has already recovered just under 90% of its earlier losses. Having
fallen precipitously by 20% in the second quarter, we expect UK GDP to have risen by a vertiginous 20% in
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the third quarter by some margin its largest-ever rise. Put differently, since May UK GDP has been rising,
on average, by around 1.5% per week.
The pace of recovery has varied, starting slowly in May, picking up pace rapidly during June and July and is
then expected to have slowed a little during August and September. Even if our GDP nowcasts for August
and September come to pass, there remains an average recession-sized gap between output and its
pre-Covid level. Nonetheless, had this economic outcome been offered as a forward contract in the early
summer months, absolutely everyone would have been a buyer.
So what explains this faster-than-expected recovery? And, crucially, will it persist in the face of the unholy
trinity of risks from Covid, unemployment and Brexit that potentially lie in store? These are related questions
because behaviours exhibited by households and businesses so far are likely to be revealing about what
impact future risks might have. Habits tend to persist. That means, for all the uncertainty about the outlook,
the UK's recent
economic performance does offer some signal about the future outlook.
The simplest explanation for the upside surprises to UK activity over recent months would be that lockdown
measures have been released sooner and faster than expected. But the pace of release from lockdown in
the UK has in fact been broadly in line with what the Bank had expected in May. The biggest surprise has
spending
been the robustness of peoples' behaviour in the face of lockdown constraints and other risks, not
the evolution of these constraints and risks per se.
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The behaviour of UK consumers has been most surprising. Based on our suite of fast indicators, UK
consumption has been rising by, on average, around 2% per week since May.2 As best we can tell,
consumer spending now stands at around pre-Covid levels. In other words, consumption has fully recovered
more than a year earlier than the Bank expected as recently as August. Large-ticket purchases, such as
cars and houses, are also back to around pre-Covid levels.
Against a backdrop of more than 40,000 Covid-related deaths, an extra 1 million people unemployed and
perhaps a quarter of the workforce having faced a cut in their incomes, the speed and scale of this recovery
in consumption is, I think, fairly remarkable. It suggests considerable resilience on the part of consumers in
the face of adversity. It also indicates considerable flexibility in both how and on what they spend.
On the how, UK consumers have (perhaps unsurprisingly) switched from the High Street online to meet their
spending needs. Online spending has jumped from 20% to almost 27% of overall spending during the
course of this year, peaking at a third of all spending in May. It seems probable some of this switch online
will endure into the future. Online habits tend to persist.
On the what, there have been notable switches in expenditure patterns in the face of new working and
socialising patterns (Table 1). According to data from Visa, on average this year spending on hotels and
accommodation is down by over 40% and on travel by over 35%. By contrast, spending on households
goods is up 8% and food spending is up by over 25%. Home production and home consumption has surged
to counterbalance the effects of reduced time and money spent away from the home.
Table 1: Average year-on-year changes in Visa Consumer Spending Index since March 2020
Food Clothing Household Hea. & Trans. & Rec. & Hot. & Misc.
etc & Foot Goods Edu. Comms Cult Rest. Goods
% 25.7 -18.2 8.0 -30.9 -35.4 -11.2 -41.8 -9.0
Source: Visa
Some of these spending habits are likely to persist. If more people work from home, travel spending is likely
to be permanently lower and office equipment spending permanently higher. Other spending switches are
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likely to reflect pent-up demand and prove temporary for example, on household goods, cars and houses.
last year's -
Nonetheless, with cumulative spending this year still running significantly below levels for
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houses and cars, 20-40% below considerable pent-up demand remains.
An interesting case study in consumer resilience comes from restaurant spending. Peak to trough, this fell
over 90% as restaurants closed. As they re-opened in July, restaurant spending picked-up, if initially slowly.
2
See Haldane and Chowla (2020).
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In surveys at the start of August, almost half of consumers said they felt very or quite uncomfortable about
visiting a restaurant. That suggested considerable caution about eating-out, with many consumers
seemingly putting a high price on personal safety.
Government's Eat Out to Help Out scheme
The provided a £10-capped subsidy to eating-out during August.
By the end of the month, it had supported 100 million meals across the UK. The scheme also provided an
interesting test-bed for answering the question: what price do people put on overcoming their caution about
visiting a restaurant? At £5.22, the answer was strikingly low.
The economic news has not all been positive. Job losses have continued to mount (though the Bank revised
down its estimate of job losses by around 720,000 between May and August). And the recovery in consumer
spending has not been matched among businesses. Business surveys suggest investment is still 20-30%
below its pre-Covid level and online job vacancies are around 45% lower. For the worst-affected sectors,
such as retail, hospitality and culture, the situation is weaker-still.
Where Next for the Economy?
The key question, at this juncture, is what happens next? Will the positive momentum of the past few
months continue or was this a false dawn? Will the resilience of the consumer, or the reticence of
companies, win out? Is the economic glass nine-tenths full or one tenth empty? Such is the uncertainty, it
would be imprudent to make confident predictions about the shape of the recovery from here - which is one
reason why, contrary to some commentary, I have not done so.
Recovering the final few percentage points of lost output was always certain to be the hardest. Adding to
that difficulty, storm clouds have recently begun re-gathering over the recovery. The three darkest of these
clouds come from the rising number of Covid infections and the accompanying re-tightening of some
lockdown restrictions across the UK; the threat from further job losses, including from the closure of the
the transition to the UK's new trading arrangements with the EU at
CJRS; and the risks from year-end.
the UK's
All three of these risks - the unholy trinity - are clear and present dangers to recovery. They are the
reason why, in its August projections, the MPC included a significant downside skew to demand. At the
same time, these risks need to be put in proportion and in context. While recognising their gravity, my
concern is that perceptions of these risks among household and businesses are, at present, exaggerated.
By creating excess caution, this has the potential to restrain unnecessarily the recovery.
Levels of anxiety among the general public ratcheted-up dramatically in March and April, by a factor of two-
thirds. Despite falling gradually, anxiety has remained at elevated levels, a third above pre-Covid levels
(Chart 1). Measures of confidence among businesses and households have followed a similar pattern,
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spiking sharply downwards and largely remaining at those low levels, despite the sharp economic recovery
(Chart 2). This suggests a persistent, and perhaps puzzling, degree of pessimism.
Chart 1: Anxiety score (mean response) Chart 2: HH and business consumer confidence
6 40 0
Headline consumer
confidence (RHS)
30
-5
5
20
-10
4
10
-15
0
3
-20
-10
Overall business
2
confidence (LHS) -25
-20
1
-30
-30
-40 -35
0
2011 2012 2013 2014 2015 2016 2017 2018 2019
Jul-18 Jul-19 Jul-20
02-Jul Jan-18 Jan-19 Jan-20
Apr-18 Oct-18 Apr-19 Oct-19 Apr-20
04-Jun
09-Apr
05-Aug
07-May
Source: ONS Sources: GfK/EC Consumer Confidence Survey, Lloyds
Note: Quarterly data to March 2020 and weekly data Business Barometer
thereafter Note: Headline consumer confidence is based on the
average of five survey balances: general macroeconomic
situation over the past 12 months and expectations for the
next 12
The failure of consumer confidence to recover is particularly striking, given the complete recovery in
consumption by households over the same period. Put differently, the historical correlation between
consumer confidence and spending appears to have broken down (Chart 3). A wedge has emerged
between peoples' expectations and their spending, between their risk perceptions and economic reality. The
same is true, to a somewhat lesser extent, among businesses.
For households, that wedge might have arisen because of fears about future unemployment or inflation.
Past experience suggests peoples' perceptions are sensitive to these
macro-economic factors which is why
"misery index".3
economists sometimes combine the two in a so-called (Economics is not called the dismal
and project it into the future using the Bank's most
science for nothing.) If you plot this index over time,
recent forecasts, two features stand out (Chart 4).
First, by the end of this year the misery index will have risen to around 8%, over two percentage points
higher than at the start of the year. Economically, this is a significant rise. But, second, in the historical
scheme of things this move is nonetheless fairly modest and the level of misery, comparatively-speaking,
3
See Nessen (2008)
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remains fairly low. The misery index also suggests some wedge has opened up between public perceptions
and policymaker expectations for the economy.
Chart 3: Consumer confidence and spending Chart 4: UK Misery Index
10 10
Percentage change Percentage point
16
Misery index
on 19Q4 difference on 19Q4
5 5
14
Retail Sales Forecast
(LHS)
12
0 0
10
-5 -5
Headline Consumer
Confidence (RHS)
8
-10 -10
6
-15 -15
4
-20 -20
2
-25 -25
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Sources: GfK/EC, ONS. Sources: ONS and Bank calculations
Notes: Headline consumer confidence is based on the Notes: Index is summation of the unemployment rate and
average of five survey balances: general macroeconomic inflation rate. Forecast is based on projections in Aug 2020
situation over the past 12 months and expectations for the Monetary Policy Report.
next 12
If the public do have an exaggerated sense of the risks they face, what might be its source? Psychological
studies suggest it may reflect behavioural biases inherited from our hunter-gatherer past. Humans tend to
This "dread risk"
over-estimate systematically risks that are systemic or existential to lives and livelihoods.4
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causes excessively cautious behaviour, sometimes with harmful side-effects as when the exaggerated fear
of flying after 9/11 caused more people to drive.5
others'
These exaggerated risk perceptions are often amplified by words and actions. Caution is contagious.
emerges is a "popular
What often then narrative". These narratives have been found to be an important
driver of collective behaviour in financial markets and the economy.6 Behavioural biases at times of
existential risk, spreading contagiously, can result in pessimistic popular narratives detached from reality. At
times of stress, a global game of Chinese Whispers can generate unduly negative expectations.
4
See Haldane (2015)
5
See Gigerenzer (2004)
6
See Akerlof and Shiller (2009)
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I think the prevailing popular economic narrative, among businesses and households currently, is unduly
negative. It has emphasized recession and risk over recovery and resilience. It has resulted in good
economic news (of which there has been plenty) being discounted too readily, and fearfulness about the
future being accentuated. Let me give a few simple examples.
- "recession" and
Chart 5 plots a simple Google search of the relative incidence of two words "recovery"; it
is an economic pessimism ratio. Before the Covid crisis, the pessimism ratio was steady. As the crisis
struck there was a predictable and sizable spike upwards, by a factor of roughly 8. Since then the ratio has
fallen somewhat, as we might expect as the economy has moved from recession to recovery.
The dynamics of this sentiment indicator are nonetheless revealing. The drift down in the ratio has been
very gradual. It remained elevated well after economic recovery had commenced and recession ceased.
Even now, four or five months into recovery, recession is out-Googling recovery by a factor of 15 to one,
above its pre-Covid level. The prevailing popular narrative on the economy has remained recessionary.
Chart 5: Ratio of Google Trends topic searches for the term recession vs economic recovery
200
Ratio of searches for recession:economic recovery
Q2 GDP
Monthly GDP
release 180
released
showing
Economic growth
160
growth
140
120
100
80
60
40
20
0
Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20
Source: Google Trends
A particularly revealing episode is associated with the notable spike in the pessimism ratio on the 12 August.
This was when the Office for National Statistics published second quarter GDP figures for the UK. These
showed a huge fall of over 20% in GDP, the largest quarterly fall on record by far. This, understandably, was
one of the top three new stories on the day. Here are some of the headlines that accompanied it:
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Yet the irony is that the only news in this release was GDP growth for the month of June, the final month of
the quarter. This saw an almost 9% rise in activity, by far the largest rise in any month ever and above
market expectations. Yet negative media headlines outnumbered positives by many multiples. Positive
economic news was media-filtered into an extreme negative event.
This filtering of good news, and accentuation of the bad, is a familiar pattern of human behaviour at times of
"catastrophizing" -
stress and uncertainty. Psychologists call it discounting the best and fixating on the
worst, whatever the balance of risks. It is a well-known problem among people suffering anxiety or
depression. Economy-wide, the result has been collective dread risk, fanned by contagious pessimism.
There is some evidence of a detachment from fundamentals in the behaviour of financial markets too.
Chart 6 plot the responsiveness of various financial prices (interest rates, equities and the exchange rate) to
macro-economic news in the two years period to the Covid crisis and during this year. Pre-Covid, all three
market prices were sensitive to macro news. Since Covid, this relationship has disappeared. Financial
markets, recently, have detached from economic fundamentals.
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Charts 6 Financial market sensitivity to economic news
3 year sterling interest rates Sterling ERI
FTSE All-Share
Source: Bloomberg Finance L.P., Reuters Tick data from Refinitiv and Bank calculations.
The Role of Policy
There is another reason why people may, at present, have an exaggerated sense of anxiety. The risks they
face (to health, jobs and Brexit) are perceived to be beyond their control. It is well-known that events
perceived to be uncontrollable add to anxiety. Indeed, anxiety can itself generate perceptions that events
are beyond your control, contributing to fatalism about the future and excess levels of caution.7
Yet the risks facing individuals, businesses and the economy at present are, at least to some degree, within
our control, collectively if not individually. All of these risks can be mitigated, if not eliminated entirely, by the
actions of individuals, businesses and policymakers.
7
See Grupe and Nitschke (2013).
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One safeguard against these risks comes from our individual actions when we socialise, shop and work. A
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further, collective, source of insurance comes from public policy public health policy, fiscal policy and
monetary policy. Extra-ordinary action has been taken on all three fronts during the Covid crisis to contain
risks to the public, businesses and the economy. As importantly, it has been made clear that further action
would be taken on all three fronts where risks to re-escalate.
Taking the three largest risks in turn, on public health there has been a worrying rise in Covid cases across
the UK recently. In response, a sequence of local lockdown measures have been put in place and last week
these were accompanied by some tightening of national restrictions. While it is too early to judge what
economic impact these measures will have, they are likely to restrain economic activity and slow growth.
At the same time, it is important to put the likely impact of these measures in proportion. While the impact on
individual businesses may be large, their direct impact on aggregate activity is likely to be modest. The
measures affect only a sub-set of spending, notably hospitality (7% of total consumption) and work-related
travel (also 7%). If both categories were to fall to their levels at the start of summer, as lockdown began to
be eased, this would take a little over 3% off levels of consumption in the fourth quarter and 2% off GDP.
But there are good reasons to think this is likely to be a significant over-estimate. Measures announced so
far are nothing like as severe as earlier in the year. Even during that earlier period, we saw significant
substitution between spending categories, partially insulating aggregate spending. In this respect, it is
notable how quickly spending in the worst Covid-affected US States bounced back recently following their
second wave.
Of course, it is possible the indirect effects of lockdown measures hit spending harder. The most important
of those effects would arise if they caused a further significant dip in consumer and/or business confidence.
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But that rather underscores my central point the importance of avoiding over-pessimistic commentary on
the economic outlook which fuels anxiety, heightens caution and risks becoming self-fulfilling.
On the risks to jobs, this is clearly real and it is very likely further losses lie ahead. In its August projections,
the MPC expected unemployment to rise to around 7.5% (or 2 1⁄2 million people) by the end of the year. On
that assumption, around two-thirds of the net job losses from the Covid crisis have already occurred, with a
further 500,000 losses expected in the remainder of the year.
That unemployment projection, while necessarily very uncertain, flowed from an assumption that UK output
would be around 7% below pre-Covid levels by year-end. With an Okun coefficient of around 0.6, that
translated into a rise of unemployment of 3-3.5 percentage points. In the August projections, this took
unemployment from its pre-Covid level of 4% to around 7-7.5% at its year-end peak.
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Since then, there have been three significant pieces of news about the jobs outlook. First, output has
continued to recover faster than expected. By the end of Q3, output is now expected to be only around 3-4%
unemployment
below its pre-Covid level. Other things equal, this lowers risks to the MPC's projections.
Second, acting in the opposite direction, there are downside risks to this output projection as we move into
the fourth quarter due to the new lockdown measures and any future measures.
the announcement of the Government's new JSS
The third piece of significant news is last week, which
provides wage subsidies to workers returning on reduced hours for a six month period. With details still to be
finalised, it is too early to reach quantitative conclusions on the impact of the JSS. The direction of its impact
risks to unemployment relative to the Bank's August projections
is clear, however, reducing which assumed
no successor scheme.
The balance of these effects on jobs is unclear. Surveys of employment expectations among households
households' expectations are consistent with a rise
and businesses are at low levels. For example, in
August
unemployment to around 8 or 9%, at least a percentage point higher than the MPC's projections.
This is another example of the wedge between public and policymaker expectations. It also means
if the MPC's projections were to
households and businesses would be positively surprised materialise.
- -
The third of the unholy trinity of risks Brexit is in some ways the hardest of all to judge. It too, though, is a
controllable risk, at least to some degree, by businesses and policymakers. Whatever the final outcome of
the trade negotiations, it is clear the UK will be leaving the customs union with the EU at the end of the year.
Doing so in a way that reduces operational frictions in trade, and hence costs for the economy, will require
intensive preparatory work by the Government and businesses.
Existing surveys suggest many firms still have a distance to travel before they are fully prepared for leaving
the customs union with the EU, understandably so given the disruption caused by Covid. But there is still
time for this operational work to be done and it will be important businesses prioritise that in the weeks ahead
to minimise disruption to their businesses and the economy. I am confident UK companies will rise to this
challenge, as they have to the challenge of Covid.
Let me say a final word on monetary policy. The MPC has already taken extraordinary monetary policy
action in the face of the Covid crisis, reducing Bank Rate by 65 basis points and expanding QE by a further
£300 billion. Through its forward guidance, the MPC has made clear that it will not tighten monetary policy
until there is clear evidence of progress being made towards reducing unemployment and returning inflation
to target on a sustainable basis.
The MPC has also made clear that it stands ready to take whatever further action is needed to support the
economy and return inflation sustainably to target, should that prove necessary. Alongside public health and
fiscal measures, this forms part of the on-going economy-wide insurance policy put in place during the Covid
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crisis. That insurance policy should be a source of confidence and comfort for companies and households
with understandable concerns about their businesses and jobs.
At its meeting earlier this month, MPC decided no further monetary policy action was needed to achieve its
The MPC's minutes also
statutory objectives. explained that the Bank would be taking forward operational
work to assess the feasibility of implementing negative interest rates, should this be required in future.
Commencing that operational work underlines the MPC's commitment to having negative rates as a
potential
tool in the monetary policy toolbox.
Some commentators have interpreted the start of this work as conveying a signal about the likelihood of the
MPC introducing negative rates in the near-term. The minutes contained no such signal. The operational
work necessary to assess the feasibility of negative rates is likely to take a number of months. After that
work is complete, judgements on negative rates will depend on the economic outlook at the time and in
particular on whether that necessitates further monetary stimulus. If that condition was satisfied, any
decision on negative rates would then depend on whether the balance of costs and benefits from using this
tool was positive and whether this cost/benefit balance favoured negative rates over other monetary tools.
All three of these conditions would need to be satisfied before negative rates became a reality. At present,
none of those conditions is in my view satisfied.
Conclusions
The economy faces uncertainties that are extraordinarily large and risks that are skewed to the downside. In
this environment, caution is natural and understandable. It is important policymakers are vigilant to these
risks and uncertainties and responsive to them with their policy actions. It is important they provide, as they
have so far, economy-wide insurance to support businesses and households during these troubled times.
That has been the approach of the MPC so far and it will continue to be its approach if new risks arise.
At the same time, it is important the unexpectedly positive progress the economy has made so far this year is
not overlooked. The economy has recovered further and faster, and has shown far-greater robustness and
resilience, than anyone expected. This positive news has received less attention than it deserves, both on
resilience to
its own terms and because of what it may tell us about the economy's future shocks.
My concern at present is that good news on the economy is being crowded-out by fears about the future.
This is human nature at times of stress. But it can also make for an overly-pessimistic popular narrative,
which fosters fear, fatalism and excess caution. This is unhealthy in itself but, if left unaddressed, also risks
becoming self-fulfilling. I have a Rooseveltian fear of fear itself.
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If the economy were sat on a psychiatrist's sofa, the diagnosis would not be especially difficult. A propensity
to dismiss good news and dwell on bad? To catastrophize about the future? The sense of events being
beyond our control? These are the psychological symptoms of anxiety. And collective anxiety is as
contagious, and could be as damaging to our well-being, as this terrible disease.
Averting an economic anxiety attack calls for a balanced and flexible approach to the words and actions of
businesses and policymakers. Planning for the worst is important, but needs to be accompanied by hope for
the best. Encouraging news about the present needs not to be drowned out by fears for the future. Now is
not the time for the economics of Chicken Licken.8
That means balance in how the economic outlook is described, acknowledging good news as well as bad,
contemplating upside as well as downside scenarios, taking positive signals (as well as some comfort) from
the resilience shown so far. This is not boosterism; it is balance, at a time when behavioural biases and
pessimistic popular narratives offer an unbalanced lens on the economy. The policy authorities, including
the Bank, have a public responsibility to avoid economic catastrophizing.
Policymakers, including the MPC, have already demonstrated a willingness to act at speed and scale to
UK's
mitigate economic risks.