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UK economy more than halfway to full recovery, says Bank governor UK economy more than halfway to full recovery, says Bank governor
(about 1 hour later)
Britain is "more than halfway towards the finish line" as the economy continues on the road to full recovery from the global financial crisis, the Bank of England governor has said. Britain is "more than halfway towards the finish line" as the economy continues on the road to full recovery from the global financial crisis, the Bank of England governor said.
Mark Carney signalled that better-than-expected growth over successive quarters had built up momentum going forward, with expectation that the economy would grow by 3.5% this year.Mark Carney signalled that better-than-expected growth over successive quarters had built up momentum going forward, with expectation that the economy would grow by 3.5% this year.
He told the Sunday Times: "Wherever the finish line was in the depths of the crisis, we are much more than halfway towards that finish line now. The expansion is proceeding, momentum is more assured; the very fact we have had consistent quarters of growth in line with, or slightly better than, our forecasts shows that."He told the Sunday Times: "Wherever the finish line was in the depths of the crisis, we are much more than halfway towards that finish line now. The expansion is proceeding, momentum is more assured; the very fact we have had consistent quarters of growth in line with, or slightly better than, our forecasts shows that."
The bank's inflation report this week gave an upgraded forecasts for gross domestic product (GDP) growth, of 3.5% this year and 3% next year.The bank's inflation report this week gave an upgraded forecasts for gross domestic product (GDP) growth, of 3.5% this year and 3% next year.
But policymakers halved the UK's pay growth forecast for 2014 from 2.5% to a below-inflation 1.25%. Official data showed annual pay fell by 0.2% in the three months to June, the first decline recorded since the height of the financial crisis in 2009, and a worse drop than the bank had been expecting.But policymakers halved the UK's pay growth forecast for 2014 from 2.5% to a below-inflation 1.25%. Official data showed annual pay fell by 0.2% in the three months to June, the first decline recorded since the height of the financial crisis in 2009, and a worse drop than the bank had been expecting.
Carney, who took over as governor last July, said he would not wait for pay to catch up with the cost of living before putting interest rates up. "We have to have the confidence that prospective real wages are going to be growing sustainably [before raising interest rates] – we don't have to wait for the fact of that turn to raise them," he told the paper.Carney, who took over as governor last July, said he would not wait for pay to catch up with the cost of living before putting interest rates up. "We have to have the confidence that prospective real wages are going to be growing sustainably [before raising interest rates] – we don't have to wait for the fact of that turn to raise them," he told the paper.
An interest rate hike is now seen as more likely in February 2015, when rates will have been held at 0.5% for nearly six years. They were cut in 2009 in an attempt to nurse the economy back to health.An interest rate hike is now seen as more likely in February 2015, when rates will have been held at 0.5% for nearly six years. They were cut in 2009 in an attempt to nurse the economy back to health.
Unemployment is expected to fall more quickly than it had previously thought, dropping below 6% this year, while inflation is expected to continue to hover below its 2% target for the next three years.Unemployment is expected to fall more quickly than it had previously thought, dropping below 6% this year, while inflation is expected to continue to hover below its 2% target for the next three years.