Britain’s growth halved


  • Business
  • Thursday, 21 Mar 2013

LONDON: British finance minister George Osborne turned to the Bank of England to do more to help spur the country's stagnant economy as he announced a halving of this year's growth forecast.

In an annual budget statement peppered with catcalls from opposition politicians, Osborne said the central bank's inflation target would remain at 2% a year but that that was not enough.

”As we've seen over the last five years, low and stable inflation is a necessary but not sufficient condition for prosperity,” he told parliament.

Osborne said the country's economy was now expected to grow only 0.6% this year, half the rate predicted only three months ago, but he vowed to stick the course on austerity. “It is taking longer than anyone hoped, but we must hold to the right track” he said.

Osborne said he was publishing a review of the Bank of England's (BoE) mandate and said the central bank might need to use “unconventional monetary policy instruments” and give a clearer idea of what it will do in the future.

Such instruments in the past have included printing money to buy assets as a way of pumping cash into the moribund economy.

“The new remit explicitly tasks the MPC (Monetary Policy Committee) with setting out clearly the tradeoffs it has made in deciding how long it will be before inflation returns to target,” he told parliament.

Such a change might make the Bank of England operate in a way similar to the US Federal Reserve which has given increasingly explicit signs about how long it will continue to provide support to the US economy.

The pound briefly fell against the dollar and was weaker against the euro. British bond, or gilt, futures pared losses.

The BoE moves coincide with the arrival in July of a new governor of the Bank of England, Mark Carney, currently the head of the Bank of Canada. Carney has previously said he wanted a debate on the role of the BoE.

Osborne said Carney and the BoE's current governor Mervyn King both agreed with the new remit which is set by the UK finance minister each year.

A further review of the mandate would be carried out before the end of 2019. - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Business , foreign

   

Next In Business News

Maybank extends over RM77bil in repayment assistance to customers as at Aug 31
CIMB Group to accelerate ambition to be Asean sustainability leader
Indonesian shares lead Asia recovery on Evergrande assurance
Oil prices rise over US$1 after report of big draw in U.S. crude stocks
Ecomate offers 49m new shares under IPO
Minimum wage can be revised in stages
Wahid sees a lot of opportunities in Islamic social finance
Solarvest launches Powervest solar financing
TAFI unit signs JVs with RM621.5mil combined GDV
Rhone Ma, Kulim enter JV for dairy project

Stories You'll Enjoy


Vouchers