UK’s economic recovery to take five years
The UK’s economy will take five and a half years to recover to pre-recession levels according to Martin Weale, a member of the Bank of England’s Monetary Policy Committee.
Speaking to the National Institute of Social and Economic Research, Mr Weale said that the recovery “unusually slow” and indicated that the Bank could enact more quantitative easing if inflation starts to fall sharply, as is expected.
Inflation fell to 5 percent in October, from a peak of 5.2 percent the previous month and it is expected to decline to 2 percent by the end of next year.
The Bank has already pumped £275bn of electronically created money into the UK economy to purchase government debt, in an effort to cut the cost of long-term borrowing and increase the value of assets such as shares and house prices.
This quantitative easing programme, which is scheduled to end in February, is expected to boost economic output by 0.5 per cent.
Last week the Bank of England cut forecasts for growth and inflation in the face of the ongoing eurozone crisis.
“Unless the economic situation improves, there is likely to be a strong case for extending the asset purchase program after the current one comes to an end,” Mr Weale said.
“At the same time I can understand the case for waiting until the marked reduction in inflation which we are predicting is clearly under way.”
In related news, Labour leader Ed Miliband is calling for the Government to change its course on the economy, prior to the delivery of the Autumn Statement by Chancellor of the Exchequer George Osborne on 29 November.
Mr Miliband believes that forecasts by the Office of Budget Responsibility will show that the Government’s ‘economic gamble’ has failed.
Prime Minister David Cameron recently told the Confederation of British Industry that getting the budget deficit under control was “proving harder than anyone envisaged”.