–Adds Detail To Version Transmitted At 1218 GMT
–Corrects BOE Implied 2011 Growth Forecast to 1.7% y/y
LONDON (MNI) – The UK economy is “cratering” and growth will be
around only half a percent this year, Bank of England Monetary Policy
Committee member Adam Posen told the Independent newspaper Thursday.
Posen paints a very downbeat view of the UK’s growth outlook and
says that he was glad that his colleagues on the MPC sanctioned stg75
billion of fresh quantitative easing at the October meeting.
“I’m glad the committee has decided to recognise the British
economy is cratering and we have a responsibility to do something about
it,” Posen said.
On the UK’s growth outlook, Posen said that his forecast was
“roughly 0.5% or below for 2011 and 0.5% or above for 2012″.
In its August Inflation Report the MPC’s implied growth forecast
for calendar year 2011 was 1.7%, and for Posen’s 2011 GDP prediction to
materialize it would require a collapse in growth in Q4.
The MPC’s implied GDP forecasts back in August were for 1.67% for
2011, 2.16% for 2012 and 2.64% for 2013, all on market rate assumptions.
It predicted Q4 GDP would come in at just under 0.5% on the quarter.
Posen’s MPC colleagues, Executive Director Markets Paul Fisher and
Martin Weale, have both warned growth could turn negative in Q4.
“I certainly do think the underlying rate of growth of the economy
is weak now and I wouldn’t be terribly surprised if we were to see
output contract in the fourth quarter,” Weale told Channel 4 this week.
Posen restated his belief inflation would fall sharply next year,
with recent inflation strength reflecting UK energy regulator Ofgem
decision to allow utility price hikes.
–London newsroom: 4420 7 862 7491; email:
drobinson@marketnews.com/wwilkes@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
