Candidate code: jkj004
INTERNATIONAL BACCALAUREATE ECONOMICS
INTERNAL ASSESSMENT COMMENTARY
Source of Article: The Telegraph
Title of Article: Bank of England ‘to inject £100bn’ to fight
second wave
Date Article Published: 31/10/2020
Date Commentary Written: 15/09/2020
Word count: 744
Commentary number: 2
Area (s) of syllabus: Macroeconomics
1
, Candidate code: jkj004
The Bank of England is poised to unveil a £100bn bond buying spree to fight the second Covid
wave as the country goes into another national lockdown.
Rate-setters will pump billions of pounds more into the economy by expanding the Bank’s
quantitative easing programme at its meeting on Thursday as fears of a double-dip
recession intensify, economists have predicted.
However, analysts at HSBC warned the vast bond-buying operations are “running out of room”,
increasing the odds of the Bank turning to controversial negative interest rates as a winter chill
descends on the economy.
The £100bn expected increase in bond purchases, also known as money printing, will lift the
Bank’s balance sheet of government and corporate debt to a record £845bn.
Live economic signals tracked by City forecasters indicate that the second wave has derailed
the UK’s recovery as tougher restrictions become more widespread.
A Jefferies gauge using job listings, road congestion, electricity usage and web traffic indicated
the UK economy started to retreat again last week as cases rocketed. Europe has seen economic
activity shrink for the past three weeks, its analysts said.
Ruth Gregory, economist at Capital Economics, warned another UK-wide lockdown would
“cause GDP to shrink again, perhaps significantly in the fourth quarter”.
Fears of a double dip downturn came as experts predicted the high street will be hit hardest this
Christmas by the new Covid measures. The national lockdown is expected to cause high street
footfall to drop by as much as 80pc, matching the decline at the peak of the crisis in April,
Springboard warned, with non-essential stores being forced to shut for a month.
Economies enjoyed a brisk recovery in the third quarter after record collapses in output during
the first half of 2020. However, ING said a double dip downturn across much of Europe is now
“unavoidable” as infections spiral out of control and countries including the UK return to
national lockdowns.
2
INTERNATIONAL BACCALAUREATE ECONOMICS
INTERNAL ASSESSMENT COMMENTARY
Source of Article: The Telegraph
Title of Article: Bank of England ‘to inject £100bn’ to fight
second wave
Date Article Published: 31/10/2020
Date Commentary Written: 15/09/2020
Word count: 744
Commentary number: 2
Area (s) of syllabus: Macroeconomics
1
, Candidate code: jkj004
The Bank of England is poised to unveil a £100bn bond buying spree to fight the second Covid
wave as the country goes into another national lockdown.
Rate-setters will pump billions of pounds more into the economy by expanding the Bank’s
quantitative easing programme at its meeting on Thursday as fears of a double-dip
recession intensify, economists have predicted.
However, analysts at HSBC warned the vast bond-buying operations are “running out of room”,
increasing the odds of the Bank turning to controversial negative interest rates as a winter chill
descends on the economy.
The £100bn expected increase in bond purchases, also known as money printing, will lift the
Bank’s balance sheet of government and corporate debt to a record £845bn.
Live economic signals tracked by City forecasters indicate that the second wave has derailed
the UK’s recovery as tougher restrictions become more widespread.
A Jefferies gauge using job listings, road congestion, electricity usage and web traffic indicated
the UK economy started to retreat again last week as cases rocketed. Europe has seen economic
activity shrink for the past three weeks, its analysts said.
Ruth Gregory, economist at Capital Economics, warned another UK-wide lockdown would
“cause GDP to shrink again, perhaps significantly in the fourth quarter”.
Fears of a double dip downturn came as experts predicted the high street will be hit hardest this
Christmas by the new Covid measures. The national lockdown is expected to cause high street
footfall to drop by as much as 80pc, matching the decline at the peak of the crisis in April,
Springboard warned, with non-essential stores being forced to shut for a month.
Economies enjoyed a brisk recovery in the third quarter after record collapses in output during
the first half of 2020. However, ING said a double dip downturn across much of Europe is now
“unavoidable” as infections spiral out of control and countries including the UK return to
national lockdowns.
2
