UK economy to be ‘incredibly anaemic’ for years says Bank chief
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The UK economy is set for very low growth, increasing inflation and higher unemployment for the next five years, according to Bank of England chief economist Spencer Dale.
In an interview with the Independent today, Dale admits that the UK will miss the Monetary Policy Committee’s inflation target of 2 per cent through 2010 in part due to the upcoming VAT hike to 20 per cent in January 2011.
Dale also admits that Britons face living standards that are “less good than they would otherwise be” as taxes rise, house prices stall and unemployment in the public sector rose to around 600,000 jobs, an approximation from the Office of Budget Responsibility.
He also says the economy would not return to normal “for an awfully long time” and warned that the outlook for the UK has deteriorated in recent months. Dale says: “There are some signs that growth may be softening, partly reflecting the June Budget. We’ve also seen tensions in financial markets increase, related to concerns about sovereign debt issues in Europe.”
Dale says the Bank will continue to carefully monitor inflation and will act if and when it rises. He says: “We know the evils of inflation. It adds to uncertainty, it destroys value of hard-earned cash and reduces the efficiency of the economy. We have to be incredibly vigilant.”
As a result of the coming together of these negative impacts he says: “For the next three, four, five years demand in the economy will be incredibly anaemic relative to previous recoveries.”
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