BoE Governor: Growth to resume in Q3
The Bank of England’s Governor, Mervyn King, has said today that there are signs that the UK economy is expanding again.
The announcement will provide hope that the UK will follow France and Germany and exit recession by experiencing positive growth.
However, in comments made to the Treasury Select Committee, Mr King expressed caution and said: “the strength and sustainability of the recovery is highly uncertain.”
His comments come on the same day that the Office for National Statistics (ONS) revealed that the Consumer Prices Index (CPI), a key measure of inflation, fell from 1.8% to 1.6% in August – the lowest level since February 2005.
Meanwhile, the Retail Prices Index (RPI) (which includes mortgage costs) crept up slightly to -1.3% from -1.4%.
Mr King added that inflation “is likely to be volatile” over the next 12 months.
He comments: “Following a precipitate fall in economic activity at the end of last year and the start of this, there are now signs that growth has resumed in the third quarter.”
In the second quarter, the UK economy contracted by 0.7%, however, this was a vast improvement on the 2.4% decline in the first quarter.
Earlier this week, the European Commission forecast that the UK economy would expand by 0.2% during the third quarter.
Furthermore, influential think tank, the National Institute of Economic and Social Research (NIESR) said last week that the economy grew 0.2% in the third quarter.
The NIESR specialises in estimating GDP prior to the release of figures from the ONS.
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