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Bank of England boss Mervyn King says he is “more uncertain now than ever” about the UK economy despite tentative signs of a recovery.
The Bank’s Governor told MPs on the Treasury Select Committee yesterday he had “genuine concerns” over the path of the recovery as banks continue to restrict lending.
Mr King and fellow Bank policymakers agreed the worst of the falls were over and said the weak pound was helping bring Britain out of recession.
They added that evidence so far was positive from its mammoth £125bn quantitative easing (QE) programme to boost the money supply.
However, the picture was “very mixed” in spite of green shoots from sectors in the economy, according to Mr King.
He said: “I feel more uncertain now than ever because it’s not a pattern of a recession coming into recovery that we’ve seen since the 1930s.
“There are genuine concerns about how quickly the recovery will pick up — looking at the clear evidence, (firms) are finding it hard to access credit from the banking system.
“A combination of that and real uncertainty over the global economy makes it very difficult to be confident of a rapid recovery.”
Mr King also told the Commons Committee that the Chancellor needed to set tougher goals to reduce the “extraordinary” UK public deficit.
Aiming to reduce the deficit — which has now soared to 12.5% of gross domestic product (GDP) — to 5.5% of GDP by the end of 2014 is an “awfully long time to show Britain is bringing down its deficit”, he said.
He called for a clearer plan to slash the deficit in the next Pre-Budget Report.
