UK shows signs of recovery from mild recession, says Bank of England
Britain is showing signs of recovery from its mild recession and will receive a boost when interest rates start coming down later this year, the Bank of England governor, Andrew Bailey, has said.
Giving evidence to the Commons Treasury committee, Bailey told MPs he wanted more evidence that inflationary pressures were easing before voting to cut rates from 5.25% but said he was “comfortable” with City forecasts predicting policy would be eased later this year.
The governor rejected accusations that Threadneedle Street’s reluctance to cut borrowing costs despite falling inflation meant it was “behind the curve” and made it clear rate cuts were coming.
“We don’t need inflation to come back to target before we cut interest rates,” Bailey said as he came under pressure from Conservative members of the Treasury committee to respond to news that the UK fell into recession in the second half of 2023.
“The economy seems to be at full employment and that’s a very good story,” the governor said. In comparison to previous downturns, the UK was suffering from a “very small recession” and was now showing “distinct signs of recovery”, he added.