Speaking at the British Property Federation conference today, Sentance said that evidence of growth in spending, house prices and business activity suggested continued economic growth.
He said: “The latest GDP figures released yesterday also showed a return to growth in the final quarter of last year though other indicators continue to suggest that recovery started earlier and may have been stronger than the provisional GDP estimates currently suggest.”
While he said the unease over the perceived recovery is understandable, he argued that UK business has “bouncebackability” and will be able to continue growing in spite of external pressures. He also said growth in other world economies will help drag the UK economy from the mire.
He says: “There is a risk that fiscal policy is tightened or that the sheer scale of the deficit acts as a bigger drag on private spending, because of the fear of future tax rises and spending cuts. However, these concerns should not be overplayed – it is the growth of activity and spending in the private sector which will ultimately determine the pace of recovery in the UK economy.”
Barclays Capital analyst Simon Hayes says Sentence’s positive stance is expected and in line with his previous sentiments.
He says: “We would not expect Sentance to support an extension of fiscal stimulus at the February MPC meeting, and believe he is likely to be among the earliest on the Committee to call for policy tightening later in the year – assuming that the economy avoids the dreaded “double dip”, as he expects.”