LONDON (MNI) – Having suffered from the credit crunch, the UK has
less capacity to withstand another economic shock and the nation as a
whole needs to boost savings, Bank of England Monetary Policy Committee
member Martin Weale said in evidence to a parliamentary hearing.
Weale steered clear of commenting on current economic and fiscal
policy, but said savings had to be increased in the medium term in both
the private and public sectors, highlighing the problems the UK faces
because of its exceptionally low savings rates.
“For the last 20, 25 years Britain has been one of the lowest
savers – this is looking at the nation’s savings, not just households’,
of the advanced economies,” Weale said.
“Essentially it is because we have been a low saving economy that
we now have worries about pensions, we have worries about all sorts of
things,” he added.
“In the medium term the economy does have to be saving more and a
part of that, I should have thought … will be the public sector
thinking about what cost pressures and expenditure pressures might come
in future,” the MPC member said.
He was downbeat about the UK’s ability to deal with another
economic shock.
“Having just had a big shock the capacity for absorbing another big
shock is much less than one would have liked,” Weale said.
He argued that the public sector, in part because of the
uncertainties involved over the impact of future demographic changes and
an ageing population, should be saving up in advance.
Weale, who has acted as an adviser on numerous governmental
statistical projects, is giving evidence to the House of Lords Public
Service and Demographic Change Committee.
— London Bureau +20 7862 7491; drobinson@marketnews.com
[TOPICS: M$$BE$]
