Andrew Bailey’s intervention comes as reports emerge that the cabinet is increasingly split over the timing of an exit from the almost month long curfew, that has brought the economy to a shuddering halt. On the one hand the “hawks”, believed to include the Chancellor Rishi Sunak, the Cabinet Office minister Michael Gove and the Trade Secretary Liz Truss, are deeply worried about the severe social and economic costs of a prolonged lockdown. On the other hand, the “doves”, who are said to number among them the Foreign Secretary Dominic Raab and the Health Secretary Matt Hancock, argue that relaxing lockdown measures too early could lead to a devastating second wave of infections, which would be disastrous for the economy.
Mr Bailey, who has recently replaced Mark Carney as Britain’s top banker, came out on the side of the cabinet “doves”.
He told the Daily Mail: “I think we have to be careful when thinking about human psychology.
“If we had a lifting and then [lockdown] came back again, I think that would damage people’s confidence very severely.
“If we have a false start… that would have potentially quite difficult effects I think.”
The new Governor of the Bank of England added that before the lockdown could be lifted firms had to be sure that it was safe for their employees to work in the offices and to travel on public transport.
He explained: “As an employer – and we have this at the Bank of England – you have to be able to answer the questions for your staff: is it safe to come to work?
“And what constitutes being safe, not just for people when they are in the building but travelling to and from the building?”
Mr Bailey is currently trying to ensure that loans that were promised by the Chancellor as part of the government’s bailout for businesses were going to those who needed them.
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However, to date only around £2 billion has been lent to UK firms under the Covid Business Interruption Loan scheme.
This is far less than countries such as the US, Switzerland and Germany have managed to deliver to their struggling businesses.
The governor admitted that there were problems with the system, due to both a huge surge in demand and the large numbers of banking staff either ill with COVID-19 or self-isolating.
He also pointed out that that lenders were struggling to carry out proper risk assessments for every firm that was applying.
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Mr Bailey said: “This gums up the operational side. It is clearly not satisfactory and the system clearly needs to be un-gummed.
“I gee up the banks regularly. The Chancellor and I are both extremely keen that credit flows to firms.”
The government’s dilemma about when to lift the lockdown has been highlighted by a report last week that said Britain could suffer its deepest recession for 300 years if the coronavirus curfew continues into the summer.
The report, produced by the Office For Budget Responsibility (OBR), indicated that the economy could shrink by as much as 35 percent this spring.
It also predicted that unemployment could surge by two million to its highest level since the nineties.
The authors of the report said the jobless total would rise by 2.1 million to 3.4 million by the end of June, going from the current rate of 3.9 per cent to 10 percent.
The OBR said unemployment would not return below 4 per cent until 2023.
Last week, the stand-in prime minister, Dominic Raab set out five conditions that would need to be met in order for restrictions to be eased.
These included a sustained fall in the daily death rate and confidence that the supply of PPE and testing can meet future demand.
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