There are still plenty of downside risks to our upbeat economic forecasts, but the events of this week highlighted two upside risks. First, the rapid rollout of vaccines means COVID-19 restrictions may be eased a bit quicker than we thought. Second, there’s a chance that households respond to that by using their savings to go on a bigger spending spree than we have assumed. So even though the Bank of England said it will be in a position to use negative interest rates in six months’ time, the markets have come round to our view that it won’t need to.
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