Bank of England Chief Economist Spencer Dale said recently that while economic recovery is likely to persist, “we can’t take it for granted.”
Dale said a “health housing market is good for [the] economy and will help to support the recovery. An increase in house building has helped boost consumer confidence, but Dale cautioned the U.K. housing market “has a…microwave type quality to it, with a tendency to turn from lukewarm to scalding hot in a matter of a few economic seconds.
He said, however, that the central bank is more prepared to handle such risks than it was in the past.
Dale said the boost in public confidence has helped to play an important role in bolstering the recovery.
“Uncertainty and fear greatly amplified the… impact of the financial crisis,” Dale said. “Companies faced with a more uncertain outlook adopted a defensive strategy, hunkering down to ensure they survived the economic storm… The cloud of uncertainty has started to lift… [and] could provide a powerful spur to the recovery.”
Additionally, Dale said the central bank’s Monetary Policy Committee’s forward guidance is “rooted in the recognition” that the economy is far from fully recovered.
“The damage and losses associated with the financial crisis… won’t be reversed by one or two quarters of strong growth,” Dale said. “You can plan for the future in the knowledge that the MPC intends to keep interest rates low until we’ve seen a prolonged period of strong growth, unemployment is significantly lower, [and] real incomes are higher.”