Bank of England Governor Mervyn King mounted a defence of the central bank’s forecasts today as he warned the UK economy would be “far from normal” for some time.
The strong pace of growth predicted by the Bank’s recent inflation reports has been criticised as over-optimistic by some experts, but Mr King stressed the UK would take a “considerable period” to return to the level of output seen before the recession.
Recent inflation reports have included forecasts showing levels of output as well as growth rates to get this “big picture” message across, the Governor said – although “some commentators have found it hard to grasp the subtleties of our forecasts”.
He told a Royal Society conference in London: “The reality is that, even if growth rebounds, the level of activity is still very likely to remain weak for a considerable period compared to the peak at the start of 2008.
“The economic environment is likely to continue to feel far from normal for some time. After all, it is ultimately the level of activity, rather than its growth rate, that matters for employment and the degree of inflationary pressure.”