Bank of England says economic shock of Covid-19 less severe than expected

Consumer spending rise cheers Bank but unemployment will double and GDP fall significantly

• Negative UK interest rates were once unthinkable

The Bank of England has said the economic shock inflicted by the coronavirus pandemic will be less severe than initially feared, despite warnings of a weaker recovery and lasting damage for jobs and growth.

Leaving interest rates on hold at a record low of 0.1%, Threadneedle Street said Britain's economy would shrink by a fifth in the first half of this year as a result of lockdown measures imposed in March. Against a backdrop of rapidly rising job losses across the country, it also warned unemployment would double by the end of the year, to 2.5 million.

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