So growth has returned. But will the recovery prove sustainable? After all, we saw growth give way to renewed slowdown back in early 2011/12. While we hope for – and forecast – a durable recovery of over 1 per cent this year and nearly 2 per cent in the next, there are risks from every angle. An escalation in the euro crisis could leave the UK vulnerable given its export and finance links. A continuation of last week’s uptrend in oil prices or a spreading of the world’s social tensions could easily dent global growth, as could the slowdown in China.
George Buckley, chief UK economist, Deutsche Bank
[Re: Mark Carney must resist the temptation to do more QE, Thursday]
This article is quite right to point out that quantitative easing has adversely affected the economy. As well as propping up “zombie firms”, however, it is worth noting that the actions of central banks has also reduced market pressure on otherwise vulnerable sovereign debt. This distortion of bond prices has allowed governments to get away with lower interest rates on their debt, reducing the imperative to deal with their fiscal positions adequately. And we’ll all be worse off in the long run.
BEST OF TWITTER
Since Labour abstained on the EU Referendum Bill, can we infer it has no objection to a referendum?
Something changed in politics this week. It’s now clear that Ed Miliband and co can be beat.
Pound continues to fall in wake of MPC statement. In danger of setting a new 52-week low against dollar.
What is the point of forward guidance if the markets are going to ignore it?