Bank of England sees slower economic recovery

Britain's economy will probably take longer to get back to its pre-crisis size than was thought,

Although the scale of this year's hit might not be as bad as feared.

That's according to the Bank of England Thursday (August 6).

The British central bank forecasts the economy could recover to pre-crisis levels by the end of 2021.

In May, the BoE had said the UK might reach that size during the second half of next year.

Although it believed the economy might take longer to recover than thought, the bank's projections for 2020 are not as grim as they were in May.

Unemployment is expected to peak at 7.5% at the end of this year - lower than the BoE's last estimate of just under 10%.

The overall UK economy is on course for a 9.5% drop this year, the BoE said.

It would be the worst performance in 99 years but not as severe as the 14% plunge the central bank called in May - that would have been the worst in more than three centuries.

The BoE also said GDP would rebound by 9% next year, weaker than the 15% surge it called in May's scenario.

The Bank also announced it will make no changes to its huge bond-buying programme, or its key interest rate - which stands at just 0.1%.

They warned it could hurt the balance sheets of banks if it took interest rates below zero.

After the BoE's forecast, the less pessimistic tone for Britain's economy saw Sterling strengthen to a new five-month high against the dollar.