Growing pains

HAVING steered the economy away from an iceberg over the last 18 months, admittedly at great expense to the taxpayer, the Government and the Bank of England now have little choice but to sit back, wait and hope for a tangible upturn.

Despite the technical end of recession, that return to prosperity has yet to be confirmed.

The surprise fall in the level of unemployment, to just below 2.5

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million in the quarter to November, is encouraging but only really

marks a scratch to the surface of a huge problem. The expectation of more cuts, particularly across the public sector in the aftermath of

the General Election, is one good reason to be concerned about the economic prospects for the rest of this year.

That's why the Bank of England's monetary policy committee was right to hold interest rates at the record low, as well as to pause in its programme of quantitative easing (QE).

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Printing money, which this is effectively, is unprecedented in this country and ploughing on with the policy would not represent courage, but simply fear.

Britain's economy might not have sunk, as many expected 12 months ago, but the jump in inflation revealed yesterday shows there is still a long way to go before reaching safety.

The economy is not yet out of choppy waters.