LONDON (MNI) – Bank of England Monetary Policy Committee member
Paul Fisher said today that although the UK economy is likely to be
basically flat this year, the recovery should strengthen as falling
inflation boosts consumers’ spending power.
“If you strip out some of the special factors affecting the economy
this year like the Royal Wedding (2011), the Jubilee and the Olympics
basically the economy is flat this year and we’ve known that for some
time,” Fisher said in an interview with BBC Radio Scotland’s Good
Morning Scotland programme.
Fisher also said that the BOE expects growth to pickup to a modest
pace at some point.
“We are expecting it (the economy) to pick up into some sort of
modest growth at some point but it is very difficult to pinpoint exactly
when that will be,” he said.
The BOE official also said that the UK should start to see real
income growth rising as inflation falls back to target.
“Ultimately a lot (of demand) must come from consumption and as
inflation sinks back toward the target, if there are no more tax
increases, if energy prices can at least stay stable, we should start to
see some real income growth supporting consumption going forward,” he
Fisher also said that the UK needs to maintain a credible fiscal
policy that retains market confidence.
“They do have to keep a credible programme for the fiscal finances
so that markets believe that they are going to repay their debt. As long
as they do that there is plenty of room for debate between the political
parties,” he said.
Fisher said that at present the supply of credit is the main
problem the BOE has to tackle, referring to the ‘Funding for Lending’
scheme launched by the BOE and UK Treasury at the start of August.
Commenting on the latest IMF World Economic Outlook forecast, which
downgraded forecasts for the world economy and for the UK, Fisher said
that it was important not to overdo the pessimism about the world
“There is a global slowdown going on but the economy globally is
not falling off the edge of a cliff … there’s a touch of the glass
half full/glass half empty about this debate,” he said.
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