LONDON (MNI) – The economy has slowed and there is a “material
chance” of a technical recession, Bank of England Monetary Policy
Committee member Ben Broadbent told the Evening Standard.
The MPC’s forecasts, in the November Inflation Report, show near
flat growth in the fourth quarter of this year and first quarter of
next. If growth comes in only marginally less than the MPC expects that
would entail two consecutive quarters of negative growth – meeting the
definition for a technical recession.
In the interview, Broadbent notes the uncertainty created by the
turmoil in the Eurozone and warns that the credit easing set in place by
the Treasury, to try and boost funding for small to medium sized
enterprises, could be swamped by what happens in the euro area.
Asked about credit easing Broadbent said “Directionally it seems
reasonable to expect it to have some impact, but it is not clear how
much, or whether it would be sufficient, for example, to offset the
realisation of some of the worst risks of the Eurozone.”
Broadbent is downbeat about near term growth, but sees real
household income growth improving next year as inflation falls.
“Clearly things have slowed a lot since earlier this year and there
is a material chance of a technical recession,” he said.
Base effects will drive inflation down early in 2012.
“VAT is not going up again and petrol and oil prices look pretty
stable. That’s a big effect which will add to real household income,”
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