Former Bank of England monetary policy committee member Andrew Sentance predicts that the current period of “disappointing growth and volatility” will last for another three years.
Sentance, who consistently called for interest rate rises during his time on the MPC, joined PricewaterhouseCoopers as a senior economic adviser last November. Speaking at the Association of Investment Companies annual conference for directors in London last week, Sentance noted the “significant parallels” between the economic downturn experienced in the 1970s and 1980s and the current economic environment.
He said: “There are very many echoes of the 1970s’ experience – a long expansion coming to an end, disruption to the international financial system and high and volatile energy and commodity prices and I am projecting we are probably in the middle of a similar period.” He said Western economies, including the UK, are adapting to “the new normal”. Sentance added: “The first phase of this new normal is the continuation of the current pattern of disappointing growth and volatility. That does not mean growth cannot pick up this year but the sort of rate we think is good needs to be calibrated downward.”
He said anything over a 2 per cent growth rate would be good. He said: “We can hold out hope for a more sustained growth dynamic but that will not be until the second half of this decade.”