BOE Dale: UK Economy Has Turned Corner On Road To Recovery

inspector_monkfish

08:20 02Dec09 BOE DALE: UK ECONOMY HAS TURNED CORNER ON ROAD TO RECOVERY

08:20 02Dec09 BOE DALE: UK ECONOMY LIKELY MOVING INTO PERIOD OF EXPANSION

08:20 02Dec09 BOE DALE: WEAK STERLING ADDING TO ECONOMIC STIMULUS

08:20 02Dec09 BOE DALE: UK CREDIT CONDITIONS SET TO REMAIN TIGHT

08:20 02Dec09 BOE DALE SEES LOWER UK CONSUMER SPENDING IN ADJUSTING ECON

08:20 02Dec09 BOE DALE: UK ECONOMIC RECOVERY TO BE SLOW

08:20 02Dec09 BOE DALE: UK CPI SET TO RISE SHARPLY IN NEXT FEW MONTHS

08:20 02Dec09 BOE DALE: STRUCTURAL ECONOMIC ADJUSTMENTS NEEDED

08:20 02Dec09 BOE Dale: UK Economy Has Turned Corner On Road To Recovery


LONDON--Bank of England Monetary Policy Committee member Spencer Dale Wednesday said that the U.K. economy has turned a corner on the road to recovery but still faces major head winds as activity slowly returns to more normal
levels.

In a speech to the Essex branch of the Institute of Directors, the BOE's chief economist Dale told members that global industrial output and the U.K.'s banking sector had now broadly stabilized but credit conditions and consumer spending would continue to weigh on the slowly recovering economy at a time when structural changes must take place.

"The ongoing structural changes that I mentioned are likely to give rise to a number of economic head winds that may impede the recovery," Dale said.

"Credit conditions are likely to remain tight for some time as banks repair their balance sheets. And the need for public and household finances to adjust to the changed economic environment will weigh on spending," he said.

Despite ongoing concerns for next year Dale said that recent data and surveys suggest that the U.K. economy is now entering "a period of renewed expansion."

The U.K. economy contracted unexpectedly by 0.3% on the quarter in the third quarter of the year, while the key euro-zone economies posted a second straight quarter of growth.

Dale also noted that the depreciation of sterling would help to stimulate economic activity by helping "to improve the ability of U.K. companies to compete in both overseas and domestic markets," he said.

The U.K.'s consumer prices index, meanwhile, is set to rise sharply over the coming months due to higher fuel prices and the reversal of the government's Value Added Tax reduction--which will return to 17.5% from 15% on Jan. 1. 2010.

"It is quite possible that the governor (Mervyn King) will have to write a letter to the chancellor (Alistair Darling) early in the New Year explaining why inflation is more than 1% above the inflation target," Dale said.

Dale adds that he expects this to be a temporary effect, however, with the continued margin of spare capacity in the economy set to push inflation back below the 2% target further out.

Highlighting the concerns he raised at the recent Monetary Policy Committee meeting he said that the spare economic capacity must be eliminated in order to keep inflation on track to hit its medium-term target rate of 2%.

Web site: www.bankofengland.co.uk

purch

UK Economy Has Turned Corner On Road To Recovery

Yeah, but it's a very bendy road ahead !!! :eek:

inspector_monkfish

purch wrote: »

Yeah, but it's a very bendy road ahead !!! :eek:

i think its just a circle

HammerSmashedFace

inspector_monkfish wrote: »

"It is quite possible that the governor (Mervyn King) will have to write a letter to the chancellor (Alistair Darling) early in the New Year explaining why inflation is more than 1% above the inflation target," Dale said.

Dale adds that he expects this to be a temporary effect.

How convenient, inflation to rise, but hey keep IR's down and keep the money printing gravy train going, after all the rise is only going to be temporary, yeah right, 25% increase in fuel alone this year, some of which will feed through to prices, nevermind the actual cost of filling your tank and that is set to get worse.

I believe we will be hitting a tipping point soon, will they turn the printing presses off in time ?

purch

will they turn the printing presses off in time ?

I think we've moved on a little from the days of William Caxton :rolleyes:

lemonjelly

I think it is fairly generally accepted now that the financial industries are busy repairing their balance sheets, & this is likely to take a little while.

I agree that any recovery will be slow.

It seems there is a critical point looming. Exports may be of a significant benefit to the national economy.

However internally, I can't help but feel that the next 2-3 months will have a major impact on the next 12-15 months of the economy.

IIRC 75% of retail business occurs around christmas/december.

If we have a bad series of figures for november/december, even january, we could have some twitchy fingers imo. Businesses will be downbeat for the forthcoming summer, & some retail divisions could be hit hard. If that happens, there is a risk of further job losses/cutbacks etc.

There is a risk of hardship with the anticipated VAT increases, fuel costs etc. Stuff like that could really draw out the difficulties for some for quite a long time.

In actuality, I hope that the consumer credit market is kept tightly reigned in for some time, & people don't use credit like they have done in the past few years. Though I'd like to see viable business lending starting to increase.

Nov/Dec/Jan could be key imo...