Bank of England chief hints at rates of interest lower and says UK recession is ‘very weak’ | EUROtoday

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The boss of the Bank of England has stated Britain’s “very small” recession could already be over in a lift for beleaguered Rishi Sunak.

Andrew Bailey advised MPs that officers on the central financial institution assume the economic system “is already showing distinct signs of an upturn”.

And, simply days after official figures confirmed Britain had fallen right into a recession, Mr Bailey stated it was the weakest downturn because the Nineteen Seventies “by a long way”.

Mr Sunak was slammed after the Office for National Statistics stated the economic system shrank by 0.3 per cent on the finish of final 12 months. Shadow chancellor Rachel Reeves stated it left his pledge to develop the economic system “in tatters”.

The prime minister has come beneath hearth after the UK entered a technical recession final week

(PA)

But, talking to parliament’s treasury committee on Tuesday, Mr Bailey stated: “We have a very precise definition of a recession in this country as two successive quarters of negative GDP growth.”

He pointed to the 0.5 per cent cumulative fall in progress final 12 months, including:

“If you look at recessions going back to the 1970s, this is the weakest by a long way because the range, I think, for the numbers for those two quarters for all the previous recessions was something like 2.5 per cent to 22 per cent in terms of negative growth, so minus 0.5 per cent is a very weak recession.”

The Bank of England boss additionally stated: “I think there’s two ways that the UK grows, first of all by restoring price stability, that’s a condition for stable growth. I think we’re well on our way to doing that.

“The second thing is – and this is part of the narrow path we’re having to walk here – that we’ve got weak supply side growth in this country and we have had for some time. So, clearly, to get faster growth, we do need to see stronger growth on the supply side.”

While the recession was described as “technical” by some, due to the restricted period of the dip, Asda chairman Lord Rose stated: “If it looks like a duck, it quacks like a duck… it’s a duck. It’s a recession. It doesn’t matter whether it’s a technical recession or not.”

Chancellor Jeremy Hunt blamed efforts to sort out excessive inflation and the current run of rate of interest rises, however maintained that the economic system was turning a nook.

Jeremy Hunt insisted there may be “light at the ed of the tunnel” if the Government sticks to its financial plan.

(PA Wire)

The revelation the UK is in recession led to elevated strain on the Bank of England to chop rates of interest.

The New Economics Foundation assume tank stated it was “no surprise” the UK had fallen into recession, “given this government’s mismanagement of the economy and the Bank of England’s panicked interest rate rises”.

But now the governor of the Bank of England has hinted that it could lower rates of interest sooner as inflation doesn’t want to succeed in the two per cent earlier than they accomplish that.

Bank of England Governor Andrew Bailey has signalled that inflation doesn’t want to succeed in 2 per cent earlier than the Bank begins reducing rates of interest

(PA Wire)

Mr Bailey advised the the treasury committee that though “the quantity side of the labour market remains tight”, the Bank of England will take into account progress in pay, labour market and providers earlier than making the choice:

“But it’s the progress of those three things.

“We don’t need inflation to come back to target before we cut interest rates, I must be very clear on that, that’s not necessary.

“We’ll be looking for sustained progress on those things to reach that judgment about how long this period of restrictive policy needs to be.”

https://www.independent.co.uk/news/uk/politics/bank-england-andrew-bailey-recession-interest-b2499124.html