Bank Rate held at 0.1% as economy set to shrink by 14%

Despite this, the Bank's forecasts show that GDP could fall by 14% this year, worse than the declines seen during the financial crisis. Business investment is expected to fall by 26% and household spending it set to drop by 14%.

CPI inflation declined to 1.5% in March and the Bank says this is likely to fall below 1% in the next few months.

In its minutes the MPC said the illustrative scenario incorporates a "very sharp fall in UK GDP in 2020 H1 and a substantial increase in unemployment" in addition to those workers who are currently furloughed.

However, the Bank expects the fall in GDP should be temporary and says activity "should pick up relatively rapidly".

However, it concluded: "Nonetheless, because a degree of precautionary behaviour by households and businesses is assumed to persist, the economy takes some time to recover towards its previous path."

Adrian Lowcock, head of personal finance at Willis Owen, commented: "The Bank's latest forecasts are the stuff of nightmares, with the UK tipped to see its economy shrink by 14% this year - a far worse decline than the one seen during the global financial crisis - while unemployment will leap to 9 million.

"The only good news today is that the Bank expects this economic bombshell to be short-lived, and for the economy to bounce back rapidly. However, the MPC itself concedes it is flying blind to a large extent, warning that a pandemic like this is "especially difficult to quantify."