Bank of England's newest MPC member Gertjan Vlieghe flags global risks to UK growth

Vlieghe joined the Bank's rate-setting committee in September (Source: Getty)

The Bank of England's (BoE) newest rate-setter has singled out headwinds from abroad as the biggest threat to the UK economy.

Speaking to the Treasury Select Committee, Gertjan Vlieghe told MPs that the BoE's monetary policy committee - which sets interest rates - must factor in global economic developments.

"We absolutely have to take into account that we are operating in a global environment, which is adverse, so to speak, in that there are headwinds to growth," he said.

"It is one of the things that will prevent the UK economy from accelerating meaningfully from its current pace of growth."

Read more: Pound tumbles as UK slips back into negative inflation

The Bank of England's MPC voted 8-1 in favour of holding interest rates at the record low 0.1 per cent earlier this month. At the time, officials said an intensified emerging market slowdown could slow the pace of UK economic growth.

Vlieghe, who joined the committee in September, also believes UK inflation is more likely to come in below target, rather than above it.

"There are risks to either side, but given the current low levels of inflation the risks are probably skewed to the downside," he said.

“Certainly he’s not in a hurry to raise rates,” said Philip Shaw, an economist at Investec.

“He’s less hawkish than some of the other members on the committee. How he votes really depends on how key elements of the data and the markets pan out.”

Vlieghe replaced David Miles in September, just as Miles was signalling that he was close to voting for a rate hike.

Official data released today showed UK inflation slipped back into negative territory for the second time since 1960. The BoE recently scaled back its forecast for when inflation will return to one per cent, to Spring from the turn of this year.

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