Economy set for triple whammy, admits Bank chief
Senior economist warns of deteriorating outlook
Growth prospects hit hard by Osborne Budget
Unemployment and inflation likely to soar.
By Sean O’Grady
Thursday, 22 July 2010
The British economy faces a triple whammy of higher inflation, lower growth and rising unemployment, according to one of the Bank of England’s most senior policy makers. Living standards over the next few years will rise only “minimally”.
In an interview with The Independent, the Bank’s chief economist, Spencer Dale, said that he did not expect inflation to return to its 2 per cent official target before the end of next year, about a year later than previously hoped, partly because of the hike in VAT to 20 per cent from January announced in the Budget.
And, although Mr Dale acknowledged that the emergency Budget had done much to avoid the risk of a UK sovereign debt crisis and a rise in interest rates, he also acknowledged that the Budget would mean lower growth. Mr Dale agreed that he would not be surprised if unemployment went higher in the next few months. For the next “three, four, five years, demand in the economy will be “incredibly anaemic” relative to previous recoveries.