BRITAIN’S construction sector should improve soon, according to Bank of England policymaker Ben Broadbent.
Rate-setters will decide next week whether to inject further stimulus into the economy on top of the £375bn approved since the start of the financial crisis.
According to official data, Britain suffered its second recession in four years between October 2011 and June 2012, when construction output slumped.
In a speech on Monday, Mr Broadbent said it was not “entirely clear that we had a double dip”.
The fact that, in his view, no boom preceded the “bust” in construction meant there was still spare capacity and room for the sector to grow, he said.
“The prospects for the construction sector look less unfavourable than they have been for a while,” Mr Broadbent said at the Lancaster University Management School.
The British construction sector, which accounts for less than seven per cent of GDP, was a victim of a global credit crunch, not a local boom beforehand, he said.
Mr Broadbent, a former Goldman Sachs economist, noted that since 2008 it was the supply of mortgage debt, not the demand for it, that was driving activity in the British housing market.
Mr Broadbent also defended inflation as the right target for the BoE’s Monetary Policy Committee, noting that the MPC would continue to set policy in order to meet it.
The MPC will announce its monthly policy decision next week and Mr Broadbent had already indicated his reluctance to vote for more quantitative easing asset purchases, saying in September that high inflation limited the central bank’s scope to ease policy.
Mr Broadbent told a regional newspaper that he had yet to reach a decision on another round of QE and said he doubted whether his fellow policymakers had done so either.
“I literally have not made up my mind and I doubt anybody else in the committee has, until they have seen everything and thought about it,” he told the Lancashire Evening Post.
Tonight, Charlie Bean, the deputy governor for monetary policy, at the Bank of England, is due to deliver the guest lecture at Hull University Business School’s annual JSG Wilson lecture in Economics.