BRITAIN faces “significant” risk of a fresh slump into recession, a leading policymaker at the Bank of England admitted yesterday as independent economists slammed the Bank for its complacency in the face of savage public sector spending cuts.
Dr Martin Weale, the newest member of the rate-setting Monetary Policy Committee (MPC), said it would be “foolish” to rule out the risk of a double-dip recession and conceded that the Bank’s central outlook – for growth of around 2.8 per cent in 2011 and 3.2 per cent in 2012, could be too optimistic. Speaking to The Times, Weale said a second economic downturn was a “real risk”.
Weale’s warning came as the minutes from a roundtable hosted by the Bank in July showed that leading City economists fear the MPC has underestimated the impact of public spending cuts. With rates at a record low, they said there is little the BoE can do to offset the pain.