Rising virus rates threaten economy, warns Bank of England

The Bank of England has warned that the rising rate of coronavirus infections and a lack of clarity over the UK's future trade relationship with the EU could threaten the economic recovery.

The UK is still in a deep recession, while Covid-19 infections are at their highest level since mid-May.

Citing the uncertainty, the Bank held interest rates at 0.1%, a historic low. It added that it would continue its monetary support for the economy but stopped short of increasing its bond-buying programme or reducing interest rates further.

The Monetary Policy Committee (MPC), which sets interest rate policy, said previous projections of economic recovery were "on the assumption of an immediate, orderly move to a comprehensive free trade agreement with the European Union on 1 January 2021".

Economic recovery would also depend on the evolution of the pandemic and measures taken to protect public health, the MPC said.

"The recent increases in Covid-19 cases in some parts of the world, including the United Kingdom, have the potential to weigh further on economic activity, albeit probably on a lesser scale than seen earlier in the year," it said.