Bank of England Governor Mervyn King said business surveys indicate the U.K. will have a “slow” recovery this year, as officials prepare for a meeting next week on whether to extend stimulus for the economy.
“It’s a patchy picture, but there are indeed signs of a recovery coming,” King said in an interview on BBC Radio 4 today. “We see that in the business surveys and I think also in the employment data. A reasonable view would be that we would start to see a steady, slow recovery coming during the course of the year.”
The Bank of England’s Monetary Policy Committee is due to hold its “pre-MPC meeting” with economists and other officials tomorrow ahead of its monthly decision on May 10. While Britain is in recession, rising oil prices are threatening to stoke inflation, and mixed data is clouding the outlook as policy makers decide whether to expand or halt their 325 billion pound ($526 billion) bond-purchase program.
King said late yesterday that the economy isn’t yet “back to health” and needs the support of low interest rates.
“We have a difficult challenge and our job is to do our best to try to steer the economy back onto a steady growth path,” he said at an event in London. “For the time being that means low interest rates.”
A report today may show that growth in services, the biggest part of the economy, probably slowed in April. An index of services may have slipped to 54.1 from 55.3, according to the median of 28 economists in a Bloomberg survey A reading above 50 indicates expansion. Similar gauges for manufacturing and construction earlier this week also declined.
To contact the reporters on this story: Scott Hamilton in London at firstname.lastname@example.org; Jennifer Ryan in Brussels at email@example.com
To contact the editor responsible for this story: Craig Stirling at firstname.lastname@example.org