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UK's economic recovery may be quicker than forecast – Bank of England

Governor says rising interest rates reflect growing optimism – but warns new Covid variants could derail progress
Britain’s economic prospects are improving as a result of the successful vaccine programme and could perform more strongly than expected over the coming months, the governor of the Bank of England has said.
Andrew Bailey said that he now saw “upside risks” to the Bank’s growth forecasts but warned there was still a risk that new Covid-19 variants would derail recovery.
The governor said rising financial market interest rates were a reflection of growing optimism in the City that the UK was at last emerging from the lockdowns of the past year.
“We have seen some increase in interest rates over the last month or so, as have other countries. My assessment so far is that that is consistent, I think, with the change in the economic outlook,” Bailey told BBC Radio 4’s Today programme.
Asked what sort of recovery the UK could expect, the governor said: “I’m now more positive, but with a large dose of caution.” The “huge” success of the vaccine programme meant the pandemic was now “in retreat” and output should return to its pre-pandemic level by the end of the year. “That’s good news, but let’s be realistic. It’s not more than getting back to where we were pre-Covid.”
In his first public comments since last week’s figures showed the economy contracted by 2.9% in January, Bailey said the impact of restrictions appeared to be lessening over time as businesses learned how to adapt.
But he added the impact of Covid-19 had been “huge” and “unequal”. It had been especially tough on low-paid people, who included a disproportionate number of women and ethnic minority workers.
Threadneedle Street’s nine-strong monetary policy committee (MPC) is expected to leave interest rates unchanged at 0.1% when it meets later this week.
Bailey said it was likely that the annual inflation rate would rise relatively quickly from its current 0.7% towards the government’s 2% target over the next few months but played down suggestions that the colossal stimulus provided by the Bank and the Treasury over the past year could result in it hitting 4-5% by the end of the year.
“That is not something we have in our forecast, I’m afraid. We have not seen the evidence of that,” he said. The MPC would need to have evidence that any rise in inflation was permanent before thinking about pushing up interest rates.
Bailey said if borrowing costs were rising due to economic growth, then the debts of companies, households and governments would be more sustainable.
The yield on 10-year British government debt was trading on Monday close to its highest level since last March when the onset of the coronavirus pandemic caused a “dash for cash” among panicked investors.
source: Larry Elliott
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BENEFIT Sponsors BuildHer...
- April 23, 2025
BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, has sponsored the BuildHer CityHack 2025 Hackathon, a two-day event spearheaded by the College of Engineering and Technology at the Royal University for Women (RUW).
Aimed at secondary school students, the event brought together a distinguished group of academic professionals and technology experts to mentor and inspire young participants.
More than 100 high school students from across the Kingdom of Bahrain took part in the hackathon, which featured an intensive programme of training workshops and hands-on sessions. These activities were tailored to enhance participants’ critical thinking, collaborative problem-solving, and team-building capabilities, while also encouraging the development of practical and sustainable solutions to contemporary challenges using modern technological tools.
BENEFIT’s Chief Executive Mr. Abdulwahed AlJanahi, commented: “Our support for this educational hackathon reflects our long-term strategic vision to nurture the talents of emerging national youth and empower the next generation of accomplished female leaders in technology. By fostering creativity and innovation, we aim to contribute meaningfully to Bahrain’s comprehensive development goals and align with the aspirations outlined in the Kingdom’s Vision 2030—an ambition in which BENEFIT plays a central role.”
Professor Riyadh Yousif Hamzah, President of the Royal University for Women, commented: “This initiative reflects our commitment to advancing women in STEM fields. We're cultivating a generation of creative, solution-driven female leaders who will drive national development. Our partnership with BENEFIT exemplifies the powerful synergy between academia and private sector in supporting educational innovation.”
Hanan Abdulla Hasan, Senior Manager, PR & Communication at BENEFIT, said: “We are honoured to collaborate with RUW in supporting this remarkable technology-focused event. It highlights our commitment to social responsibility, and our ongoing efforts to enhance the digital and innovation capabilities of young Bahraini women and foster their ability to harness technological tools in the service of a smarter, more sustainable future.”
For his part, Dr. Humam ElAgha, Acting Dean of the College of Engineering and Technology at the University, said: “BuildHer CityHack 2025 embodies our hands-on approach to education. By tackling real-world problems through creative thinking and sustainable solutions, we're preparing women to thrive in the knowledge economy – a cornerstone of the University's vision.”
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