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Bank warns on 'substantial' headwinds hindering UK recovery
The Bank of England has said hurdles continue to stand in the way of Britain's recovery, after governor Mervyn King called on the government to do more to boost growth.
The Bank of England has warned that 'substantial headwinds' continue to stand in the way of the UK's recovery, after its governor Mervyn King urged the government to do more to stimulate growth.
Following surprisingly resilient employment data – showing unemployment fell to 2.49 million – the Bank released the minutes from its latest monetary policy committee (MPC) meeting and raised concerns about the hurdles blocking Britain's return to economic strength.
The growth in household and real incomes has remained choked and there has been a significant drag from fiscal consolidation, the committee said.
On Tuesday, King (pictured) said the recovery had been 'disappointingly slow' and in the MPC's minutes the Bank went into more detail about the difficulties the UK faced.
'The existence of a significant current account deficit at a time of subdued activity and spare capacity suggested that the sterling real exchange rate might be above the level compatible with the necessary rebalancing of the economy,' they said.
There was also little in the way of news to tempt the MPC to alter its inflation outlook, and felt it was too soon to consider the impact of further stimulus.
The minutes of the MPC's monthly meetings, published about two weeks after the meeting is held, are always closely-scrutinised by economists for signs of the Bank's next steps. 'While we do not expect a new round of QE to be announced, we continue to see a bias to easing further,' commented Nomura's Andy Chaytor.
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