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Miles says banks are on life support

David Miles, the newest member of the Bank of England’s monetary policy committee, says economic growth will be “fairly anaemic” in the near future and that UK banks are currently on life support.

Speaking at a Treasury select committee on his MPC appointment last week, Miles said: “The problem remains that the banking sector is essentially on life support and the ability of the banks to lend is curtailed.”

He said that prospects of a fast return to strong growth are unlikely as a result but he added there were reasons to hope that the most rapid declines in output are now behind us.

Miles also faced a grilling from MPs over his dual role as a non-executive director at the FSA and his appointment to the MPC.

TSC member Andrew Tyrie, MP, said: “A trend towards doubling up on those two jobs may carry some advantages but also carries the risk of being conflicted.

“To be doing two paid jobs in two institutions that have different statutory responsibilities, and between who from time to time there has been significant – indeed, recently, quite a lot of tension – don’t you see a conflict there?”

Miles responded: “I discussed with both the governor of the bank and the chairman of the FSA whether they saw a problem or conflict with me sitting on both decision-making bodies.

“They said they did not. Indeed, they thought there were advantages. I am not the first person to sit on both.”

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