–Comments From Interview With Newcastle Journal
LONDON (MNI) – Bank of England Monetary Policy Committee Member
Martin Weale has conceded that the growth forecast by the BOE in the
February inflation report had failed to materialise.
The BOE had forecast growth of 0.5% in Q1, but official figures
released this week showed that the economy had in fact contracted 0.2%,
tipping the economy back into recession.
“We’ve been forecasting growth that hasn’t materialised… This is
a situation which is historically very unusual and as far as we could
tell, the economy was in healthier shape than we thought it would be
looking ahead from late last year … but like all forecasts that
doesn’t necessarily mean what is predicted is going to happen,” Weale
told the Newcastle Journal newspaper.
Weale also said that household deleveraging had left consumer
spending at a low.
“Overall saving and people paying off their debts has meant that
consumer spending has been at a low. This is coupled with the fact that
many employers are freezing wages while the cost of living is going up,”
he added.
The policymaker also said that the crisis in the euro zone had
sucked some of the strength out of the UK’s economic recovery.
“It’s also made much harder when so much of the rest of Europe is
in recession or heading into it,” Weale said.
Weale said that the current recession will not have the same impact
on the economy as the one that hit the country in the wake of the
collapse of Lehman Brothers in 2008.
“The shrinkage has been much less than one quarter of falling
output in 2008 – however, we cannot take things for granted,” Weale
said.
–London bureau: +4420 7862 7492; email: ukeditorial@marketnews.com
[TOPICS: M$B$$$,M$$BE$]