UK economic recovery 'is on track'

Britain's economic outlook will still be bumpy, though the recovery looks broadly on track, Bank of England policymaker Kate Barker said in a speech yesterday.

Touching on broader issues with the Bank's inflation-fighting framework as well as more recent economic data, Barker said the central bank was having a challenge reconciling upward inflation surprises with the large amount of spare capacity in the economy.

"There are grounds for optimism from recent data that the recovery is broadly on track," Barker told the National Institute for Economic and Social Research, citing upbeat jobs data and revised fourth-quarter growth figures. "I don't think it is yet possible to be confident in the pace of recovery, and still expect the path to be bumpy. But some of the severe downside risks have diminished."

Hide Ad
Hide Ad

However, concerns remained from the cost of credit and weak global growth, especially in the European Union, Barker said.

But more quantitative easing would be likely to have diminishing returns as far as helping the economy by raising the price of riskier assets, she added. "As yet, I don't consider the evidence suggests that this rise in asset prices has gone too far," she said.

"Rather, my concern is that this channel might become less powerful if quantitative easing were to be extended."