Britain may be as much as three quarters of the way through the process of working off the high debt levels which have weighed on the economy since the financial crisis, a top Bank of England policymaker said yesterday.
Paul Fisher, one of nine members of the bank’s rate-setting committee, said growth would remain weak while Britain’s households, public sector, banks and other companies sought to get themselves back to financial health.
“In my view we are maybe two thirds to three quarters of the way through in each case, varying both across and within sectors,” Mr Fisher said.
“There is nothing scientific or ‘official’ in that assessment,” he added. “It’s just a personal best guess on the back of how the economy is behaving plus some direct knowledge of the progress of the banks with their deleveraging plans.” Britain’s economy grew 0.3 per cent in the first quarter of 2013 after stagnating for two years.
That, and other signs of a slow recovery, have prompted some cautious optimism from the Bank of England’s leadership that the worst might be over.
Fisher said the process of tackling high debt levels did not need to be completely finished before growth can strengthen.
He is one of three Bank policymakers who have voted, unsuccessfully, since February for a resumption of bond-buying by the central bank to give the recovery more help.
But in his speech to a group of businessmen in the Welsh capital, he warned that pumping too much money into the economy might fuel inflation.
“We cannot guarantee that a specific monetary boost will split the real and inflationary outcomes in the way that we might all wish,” he said.