Lockdown leading to 'very difficult period' for UK economy, warns Bank governor
January 12, 2021, 12:36 pm

Lockdown leading to 'very difficult period' for UK economy, warns Bank governor

Andrew Bailey said that lockdown would probably delay economic recovery.

Andrew Bailey says unemployment thought to be over 6% and talks down prospect of negative interest rates

The Bank of England governor, Andrew Bailey, has said the economy is in a “very difficult period” due the latest Covid-19 lockdown and it would probably delay the recovery.

In comments on Tuesday that echoed warnings from the chancellor, Rishi Sunak, a day earlier that the economy “is going to get worse before it gets better”, Bailey said it would bounce back, but only after the lockdown had ended and concerns about the spread of the virus had receded.

“ in a very difficult period at the moment and there’s no question that it’s going to delay, probably, the trajectory,” he said.

In a speech online to the Scottish Chambers of Commerce he said the shape of the recovery, while delayed, would broadly follow the forecast made by the Bank’s monetary policy committee (MPC) last November.

Bailey said the unemployment rate, which he previously expected to peak at about 7%-8% in the summer would be lower after the government extended its job protection scheme and other measures to safeguard household incomes.

However, the rate was likely to rise above the 4.9% that official figures estimate for the three months to October.

Bailey said the figure was already higher despite the extra measures that Sunak has announced, including a further £4.5bn last week for the hospitality sector.

“Our best guess nationwide is probably it’s around 6.5%,” Bailey said.

The MPC meets early next month to discuss how the central bank can help to protect the economy during the lockdown, including whether interest rates should be cut to below zero – a move that could ease borrowing costs on households and businesses.

Bailey said he was sceptical that a cut from the current all-time low of 0.1%would be painless, arguing it could make the situation worse.

He said there were “lots of issues” with cutting interest rates into negative territory and such a move could hurt banks.

“In simple economics and maths terms, there is nothing to stop it at all,” he said. “However there are a lot of issues with it.”

On Monday, one of the MPC’s nine committee members said she believed negative rates would benefit the UK economy and help it make a faster recovery.

Silvana Tenreyro said central banks in Japan and the eurozone had cut rates to below zero to support borrowing and she was likely to vote for the UK to follow suit when a review by the Bank was completed.

Bailey said negative rates – the subject of a feasibility review by the central bank – would complicate banks’ efforts to be profitable and force them to restrict lending.

He argued that it was not easy to draw a direct parallel with similar action in the eurozone, where banks have mostly passed on the benefits to large businesses.

source: Phillip Inman

Levant

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BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).

Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.