BoE's Haldane warns against 'Chicken Licken' pessimism

The Bank of England’s Andy Haldane has warned against adopting too gloomy a view of the UK’s economic prospects following the Covid-19 pandemic.

In a speech on economic anxiety, the Bank’s chief economist – who is also a member of the rate-setting Monetary Policy Committee – acknowledged that the UK faced an “unholy trinity of risks” from Covid-19, unemployment and Brexit, which gave “good grounds for caution”.

But he insisted that should not be allowed to overshadow the country’s quicker-than-expected recovery post lockdown. “Pessimism can be as contagious as the disease, and as damaging to our economic fortunes.”

Excess caution, he argued, “has the potential to restrain unnecessarily the recovery”.

He continued: “Planning for the worst is important, but needs to be accompanied by hope for the best. Encouraging news about the present needs not be to drowned out by fears for the future. Now is not the time for Chicken Licken.”

In the traditional children’s story, a chick becomes irrationally convinced the sky is falling in after being hit on the head by an acorn.

Haldane also used the speech to reiterate the Bank’s ongoing support for low interest rates, noting: “For its part, the MPC has committed to keeping borrowing costs at current extraordinarily low levels to support jobs and incomes for as long as necessary to return inflation to target.” The cost of borrowing currently stands at just 0.1%.