Bank of England deputy governor Jon Cunliffe says UK economy "pretty strong" and next interest rate move likely to be a rise

Jessica Morris
Follow Jessica
Cunliffe the UK has had the sharpest drop in unemployment for 40 years (Source: Getty)

Bank of England (BoE) deputy governor Jon Cunliffe has said Britain's economy is "pretty strong" and that the next interest rate move should be in an upwards direction.

"We’ve got to look 18-24 months ahead but if you put that economic picture together it seems that the next move on monetary policy would be up and is also looks as if it will be a limited and gradual rise when it happens," he told ChronicleLive.

His comments come after the Bank's chief economist, Andy Haldane, suggested that the main rate could be cut if downside risks to growth and inflation materialise.

Cunliffe added that the UK economy is performing well compared to its international counterparts. It grew 0.7 per cent in the second quarter of this year, but it's expected to tail off slightly in August, September and October. But rather than growth stoking inflation, he said prices are being kept around zero by global factors.

Read more: Haldane says next interest rate move may be cut rather than a hike

"The economy is growing pretty much at pre-trend levels, about 2.5 to 2.75 per cent a year. That’s not spectacular, 3.5-4 per cent growth, but for the state of the world as it is now, it’s pretty good. If you look around, the UK and the US seem to be the only places that are growing strongly," he said.

"We’ve had the sharpest drop in unemployment for 40 years, we’re starting to see pay come back, we’re starting to see productivity come back with a couple of readings that are a bit more positive, consumer confidence is at record highs and this is not a debt-fuelled consumption boom."

"All of that looks pretty strong for the UK economy and the BoE’s forecast is for the economy to keep growing at roughly those rates for the next couple of years. That’s a pretty robust picture."

His comments come as the BoE appears to be moving closer towards its first interest rate hike in more than six years. Governor Mark Carney has said that the rate decision will come into sharper focus around the turn of this year, providing economic growth remains on course, and underlying inflationary pressures firm.

Related articles