BoE says it can’t predict slumps as Posen warns of more pain to come

THE Bank of England cannot predict major recessions with any “precision”, the deputy governor admitted yesterday.

Conceding that the Bank failed to forecast the “great contraction” of 2008 and 2009, Charles Bean said that only policy-induced recessions, such as those introduced to reduce inflation, were predictable, while in other cases the best policymakers can hope for is to “be more alert to the vulnerabilities” building up to a crisis.

Bean’s frank comments to the Royal Statistical Society came as fellow MPC member Adam Posen warned of further pain ahead for the UK economy. In an interview with The Times, Posen said that the coalition’s deficit-cutting plans will deliver a “material” hit to British economic growth over the next two years.