The Bank of England’s chief economist Spencer Dale believes that the UK economy will need “a number of years” to fully recover. The economist also believes that the currently low interest rates will remain at a flat or slow growth rate for a “sustained period” as the economy slowly moves back in the right direction.
Despite the somewhat conservative outlook on economic recovery, Mr Dale believes that the United Kingdom is moving in the right direction. He recently noted that the UK housing market is improving at a sustainable level and that there is only a slight risk of a housing market bubble developing.
Mr Dale said that the UK housing market could “quickly go from normal levels to overheating” and cause problems for property investors, but noted that the UK is currently “not there now” and that housing growth has been within safe limits.
The chief economist sits on the Bank of England’s Monetary Policy Committee – a committee responsible for setting the country’s interest rates. Last week, members of the committee unanimously voted to leave the Bank of England’s interest rates at 0.5% and plans to closely watch unemployment when determining future action.
Bank of England governor Mark Carney has said that he will not even consider an increase in interest rates until the nation’s unemployment rate has fallen to seven per cent or less. While unemployment is on track to fall below 7% within the next few years, the Bank has indicated that it will not automatically lead to higher rates.
The views of Mr Dale seem to reflect those of others at the Bank of England, which has largely voiced its approval of current recovery efforts. The MPC claims that the economy is undergoing a “sustained recovery” and that inflation and other common concerns are not major risks.
