MONETARY Policy Committee member McCafferty has put a brave face on the UK's recent economic performance, ahead of figures tomorrow which will show whether or not it has suffered its third recession since 2008.
Mr McCafferty, speaking yesterday at a Women in Business event at Coventry and Warwickshire Chamber of Commerce, declared he was hopeful about the prospects for the UK through 2013 and 2014.
He said UK growth had been lethargic because of legacies from the financial crisis, with under-capitalised banks needing to reduce leverage, consumers focused on saving more, and the inevitable fiscal austerity required given the deterioration in the public finances.
He added that, in the past two years, growth had been depressed further by a dramatic squeeze on household incomes because of elevated inflation, a global trade slowdown, and heightened uncertainty from the ongoing euro area crisis.
However, he added: "If we adjust overall GDP [gross domestic product] growth for the sharp falls in construction and North Sea oil output, the rest of the economy – over 90% of GDP – grew by 1.2% last year -somewhat removed from the reports of semi-permanent, triple-dip, recession."
Figures tomorrow will show whether or not the UK suffered a second straight quarter of decline in the opening three months of 2013 – which would constitute triple-dip recession.
Mr McCafferty struck an upbeat tone on the outlook, at odds with the views of some other economic experts. He saw an improvement in credit conditions and the housing market, and resilient employment.
He said he had been "struck by the improvement in business sentiment due to the perceived reduction in the tail risk of a disruptive and sudden unravelling in the euro area". But he viewed the inflation outlook as "more concerning".
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