MPC member gives negative outlook for economy

| July 22, 2010 | 0 Comments

One of the Bank of England’s most senior policy makers, Spencer Dale, has provided a gloomy outlook for the UK economy.

In an interview with the Independent, Mr Dale has warned that growth prospects have been hit following Chancellor George Osborne’s tough austerity measures. Furthermore, unemployment and inflation are likely to rise.

He added that the economy would not return to pre-recession levels “for an awfully long time.”

“Inflation has come out a little higher than expected, and the news on VAT in the June budget means that the time it will take inflation to get back to target will be pushed out, and I expect it will be above target until the end of next year,” said Mr Dale.

Despite Mr Dale’s concern for stubbornly high inflation, he did not join fellow Monetary Policy Committee member, Andrew Sentance, in voting for an interest rate rise at this month’s meeting.

The CPI inflation rate is a benchmark for the MPC and despite inflation not falling as quickly as hoped, policy makers continue to keep interest rates at the historic low of 0.5% – where they have been since March 2009.

“We know the evils of inflation,” Mr Dale said. “We have to be incredibly vigilant.”

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