Some 2.2 million unemployed at "very difficult period" for the economy

Bank of England governor Andrew Bailey said the economy was going through a "very challenging phase," due to the recent Covid-19 lockdown and this was likely to delay the recovery

He added that the UK unemployment rate now stands at around 6.5 per cent, compared with an official figure of 4.9 per cent (4.2 per cent in Scotland), where it will get worse as people return from the holidays angry in the spring.

"We are at a very difficult stage at the moment, and there is no doubt to this point it will likely delay the development," he said.

Scottish shellfish exporters have struggled to export their products to continental Europe, since Brexit, but Mr Bailey said it is too early to assess just how disruptive an EU withdrawal could be for the UK economy following a 'adjustment'

Speaking in an exclusive speech to the Scottish Chambers of Commerce, Bailey said although the form of recovery was tentative, it would broadly mirror that set out by the Bank's Monetary Policy Committee (MPC) last November.

The new and more virulent strains of Covid-19 are likely to dampen economic activity in the first half of the year, he said, adding that the introduction of vaccines is the best hope "return to earlier life as soon as possible."

There are "many problems" with reducing interest rates to negative, he said, and such a move may harm banks.

The "monetary transmission mechanism" a vital part of the rebound, and the ability to kick-start business investment "rely enormously" on banks, which in turn need returns.