Bank of England member warns economy could shrink

BANK of England member Kate Barber has warned that the economy could shrink again but a double-dip recession is unlikely.

Barker, who sits on the monetary policy committee that sets interest rates, predicted a another quarter of falling gross domestic product this year.

She said: “It's possible we will have a quarter when GDP falls, but I don't think it will be a double-dip. I would be surprised if we go back to recession but I think the recovery will be bumpy and fragile.”

Barker added that the VAT hike from 15 per cent to 17.5 per cent on 1 January had hit the economy early this year.

She added: “I think lots of things were going on at the start of the year which makes it difficult.”