LONDON (Reuters) – Bank of England Governor Andrew Bailey said on Monday that people should be positive about Britain’s economic prospects as it emerges from the COVID pandemic but also realistic about the challenges from structural change.

“If I had to summarise the diagnosis, it’s positive but with large doses of cautionary realism,” Bailey said in a speech to the Resolution Foundation, a think tank.

A slowing of new COVID infections and the “huge achievement” of Britain’s vaccine programme meant there was light at the end of the tunnel.

Bailey said the expected recovery would be helped by the BoE’s ultra-low interest rates and its bond-buying programme, “and in my view it amply justifies our current stance on monetary policy”.

Finance minister Rishi Sunak’s decision last week to extend furlough support until the end of September was likely to limit the peak in unemployment but was unlikely to completely stop joblessness rising after the programme ends, Bailey added.

Sunak’s budget also included measures to support economic growth through significant investment in infrastructure, skills and innovation, Bailey said, potentially easing one of the drags on Britain’s economy.

But there was a lot of uncertainty about how much the changes in the economy seen during the pandemic would persist.

“We will work more from home than we used to and shop more online because new habits will persist to some degree, and to the extent they unwind it will be over a period of time,” he said.

Last month, the BoE said Britain’s economy would probably contract by 4% in the first three months of 2021 before recovering rapidly over the rest of the year to regain its pre-pandemic size by the first quarter of 2022.

Britain has rolled out Europe’s fastest COVID-19 vaccination programme which has so far reached more than one in three adults for a first jab.

The BoE also gave British lenders at least six months’ breathing space before any decision to use negative interest rates.

(Reporting by David Milliken and William Schomberg)