06 Jul 2012
“Recovery still five years away”
The UK economy will not “get back on track” until at least 2017, according to the Governor of the Bank of England.
Addressing MPs at the Treasury Select Committee, Sir Mervyn King said: “I don’t think we’re even half-way through the economic crisis yet, and there are still enormous challenges.”
He said that the Bank had not ruled out cutting interest rates from their current historic low of 0.5% to zero, reflecting policies in countries like the USA and Japan. He was one of four members of the Bank’s rate-setting committee to vote for more money printing this month in an effort to stimulate growth. He said he had backed a £50 billion increase in the £325 billion ‘quantitative easing’ programme because “we should be concerned about what is happening in the euro area and concerned that the world economy seems to be slowing down rather than picking up – that is something that is bound to affect us”.
He expressed particular fears about signs of a slowdown in Asia and the USA, and he said he remained pessimistic about the euro crisis. “For two years, we’ve seen the situation get worse,” adding that in the UK “we’re still facing an enormous economic problem.”