International Finance

Britain’s economic risks have ‘intensified’, BOE economist says

Bank of England, Britain economy, Brexit uncertainity, economist Gertjan Vlieghe
Economist Gertjan Vlieghe said that the British economy would accelerate in the absence of trade tensions and Brexit uncertainty

Bank of England’s economist Gertjan Vlieghe said that Britain’s economic risks have ‘intensified’, and it shows in the bank’s most recent forecast last month, according to media reports.

Vlieghe said, “The news since May I think has been, both in the data has been a little disappointing and in terms of both the global downside risks and the domestic downside risks my read is that they have both intensified.”

 During a discussion panel at the National Institute of Economic and Social Research Vliege said that he would have expected the British economy to gain momentum if not for the current trade tensions and Brexit uncertainty adding to Britain’s economic risks.  

The recovery in the next decade is stronger in investments and weaker in employment growth, he added. In February, Vlieghe said there was ‘considerable uncertainty’ towards his economic forecasts. This meant that ‘a lot needs to go right for the conditions to become right.

“I feel I can probably wait to see evidence of growth stabilising and inflation pressure rising before considering the next hike in the bank rate,” he said.

Also, ‘around one quarter-point hike per year seems a reasonable central case’, if the global growth does not slow down anymore; if Britain achieves the deal; and if pay growth adds pressure on inflation.

“I judge that the net balance of economic news has been to the downside. I therefore, consider that the appropriate pace of monetary tightening is somewhat slower than I judged it to be a year ago,” Vlieghe said at the Resolution Foundation.

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